Financial Stability Board chair Andrew Bailey, the G20’s risk watchdog, told G20 ministers that given the current economic uncertainties, there are elevated risks of equity market volatility, according to a Reuters report.
In a letter dated Oct. 8, Bailey wrote: “While most jurisdictions have seen a rebound in financial markets in recent months, valuations could now be at odds with the uncertain economic and geopolitical outlook, leaving markets susceptible to a disorderly adjustment.”
That warning came only days before last week’s sudden drop in the U.S. markets, spurred by President Trump’s threat of higher tariffs on China in retaliation for that country’s tightening restrictions on rare earth exports, according to the Reuters story.
Bailey pointed to other risk factors in global markets, including sovereign debt levels.
In response to the elevated risks, the FSB, which groups central banks and financial regulators from Group of 20 economies, will “pivot” its focus, Bailey said, from policy development to monitoring and facilitating the implementation of agreed global financial reforms, which have not been completely achieved.
“The effectiveness of these measures depends on their timely, consistent and comprehensive implementation across all jurisdictions,” Bailey said.
The G20, or Group of 20, is an intergovernmental forum comprising 19 sovereign countries — including the United States — the European Union and the African Union.
After a rebound on Monday, U.S. markets were down at the open this morning, with elevated levels in the VIX — a measure of market volatility.
