Banking risk in Fathom’s Financial Vulnerability Indicator is currently not elevated — but this does not mean that there is no systemic risk; in fact, financial crises often arise from financial innovation aiming to arbitrage or circumvent regulation. In this note we explain why private credit might be similarly systemic Systemic guardrails such as Basel III, introduced after the 2008 crisis, aim to limit risk-taking by banks and ensure adequate capitalisation, liquidity and credit scoring, while segmenting core banking from…