Regulators Need to Play Catch Up on Private-Credit Risk, Canada Central Banker Says

By Paul Vieira

OTTAWA--Global authorities must step up their surveillance of lending by nonbank players like hedge funds and institutional investors to minimize risks to financial stability, says Bank of Canada Gov. Tiff Macklem.

Stronger banking regulations introduced following the 2008-09 financial crisis has shifted riskier activities to nonbank participants like hedge funds, pension funds and asset managers, Macklem said, according to prepared remarks for delivery in Toronto.

This shift, Macklem said, has helped diversify risk and improved access to financing. "But risks have not disappeared - they've migrated. And our global surveillance and regulatory frameworks haven't kept pace with the change."

He added: "Risks may be growing faster than our ability to understand and mitigate them. Economic uncertainty is already high-we cannot afford to add financial instability to the mix."

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03-04-26 1035ET