I've been told by the head of compliance of the largest European banking group that 2.5% is exactly the threshold at which they begin to be very worried/ at systemic risk
replyApparently they operate on very low level of tolerable risk (way lower than I thought)
>2.5% is likely still survivable, but i think risk departments + regulators are all a lot less risk tolerant after seeing how quickly things went south in 2008 and worries about an out of control spiral
replyThat's only loans to non bank financial institutions.
replyTotal bank balance sheets are about $25T.
And then that 25% is 10% of US banks' entire lending portfolio, so private credit is about 2.5% of their entire portfolio.
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