Fed’s Kashkari says private credit may lessen systemic risk
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Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, stated that the rise of the private credit market could reduce systemic risk in the US financial system. He noted that private credit, which has grown to over a trillion dollars, is typically levered one to one, compared to US banks which are levered about 10 to one. Kashkari expressed cautious optimism about private credit's potential to introduce less risk due to longer capital lock-in periods. He acknowledged the lack of political will for increasing bank capital requirements and highlighted the need for tighter regulation on banks. The private credit market is currently valued at approximately $1.7 trillion, with regulators increasing scrutiny over the industry.

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