Bank of England Warns Middle East Conflict Could Trigger Multiple Financial Risks

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London : The Bank of England has warned that the conflict in the Middle East could trigger several financial risks at the same time, urging banks and investors to strengthen stress testing and liquidity planning.

The central bank's Financial Policy Committee said higher energy prices, rising government bond yields, weaker economic growth and tighter financial conditions could combine to increase pressure on global financial markets.

The committee also flagged vulnerabilities in sovereign debt markets, private credit and highly valued assets, particularly US artificial intelligence-related technology stocks, warning that a worsening economic outlook could lead to sharp market corrections.

Despite the heightened risks, the Bank of England said the UK banking system remains well capitalised and left its countercyclical capital buffer unchanged at 2%, adding that there is no evidence banks are restricting lending.

Pic Credit: AFP