IMF Warns Lack of Transparency in $2 Trillion Private Credit Industry Threatens Financial Stability

The private credit industry has grown rapidly to over $2 trillion in assets last year, but operates with little transparency and regulation.

The IMF warns the opacity and interconnectedness with mainstream finance poses risks to broader financial stability.

Private credit fills a need by financing risky firms, but standards may be looser as it competes with banks.

There are worries over inaccurate valuations, unclear credit quality, and exposure spreading from Wall Street to Main Street.

The IMF says the sector may amplify an economic recession given its size and links to the wider system.