While the average firm has enough liquid assets to manage an increase in interest rates or a decline in income, some companies have relatively few liquid assets and less capacity to service their debts. In this context, lower-rated firms are relying more on US high-yield bonds and leveraged loans, and borrowers in these markets are more vulnerable to sudden swings in investor sentiment.
We will be monitoring the situation. We are also putting more emphasis on the vulnerability related to crypto assets. These continue to pose little threat to the financial system. But crypto markets and the uses of the underlying technology are changing quickly. So, implications for financial stability might arise suddenly.