BIS Warns Over Rising Leverage, Cites Near-Collapse of Situational Awareness Fund

TREE NEWS reports: The Bank for International Settlements warned that central banks and investors must address growing vulnerabilities as rising leverage across multiple markets threatens to amplify ordinary market swings, pointing to the near-collapse of the Situational Awareness fund in July as a cautionary case. BIS financial stability policy head Gaston Gelos said hedge funds now sit “at the core of core markets,” creating fragility dependent on high leverage and liquidity that can vanish quickly. BIS economics head Frank Smets said market stress has not yet materialized but the risk should not be dismissed.