Bank of England warns of liquidity and credit risk problems

In its latest Financial Stability Report, released yesterday, the Bank of England said the UK financial system was still healthy, but warned that advances in financial engineering were exposing the system to the risk of a sudden decline in credit quality or market liquidity.

The rapid growth in credit markets meant risk monitoring and risk assessment could both have been harmed, and firms had become more dependent on the maintenance of market liquidity, the report said. "These drivers have poten

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