Financial Stability Board Warns of Growing Vulnerabilities in Global Repo Markets

The Financial Stability Board has issued a warning that vulnerabilities are building across the market for government bond-backed repurchase agreements. According to the board, which is chaired by Andrew Bailey andrew bailey, these risks include a build-up of leverage, demand and supply imbalances, and high concentration among borrowers, lenders, and intermediaries. Roughly $16 trillion in government bond-backed repos were outstanding at the end of 2024, representing an increase of about 20% since 2022. Because this market underpins bond-market liquidity by allowing firms to borrow cash against sovereign debt, the identified weaknesses could pose risks to the broader financial system.