FSB Report on Repo Market Vulnerabilities

FSB Publications

Published February 4th, 2026

Detected March 12th, 2026

Summary

The Financial Stability Board (FSB) has released a report warning of vulnerabilities in government bond-backed repo markets. The report highlights potential contagion channels and emphasizes the need to preserve market functionality during stress periods, offering policy implications for regulators.

View original document View source feed page

What changed

The Financial Stability Board (FSB) has published a report detailing significant vulnerabilities within government bond-backed repo markets. The report, issued on February 4, 2026, assesses how leverage, reliance on short-term funding, and liquidity/maturity transformation in these markets can amplify financial shocks. It also identifies key channels of contagion to the broader financial system and discusses data gaps.

While this report does not impose immediate new obligations, it serves as a critical assessment for financial institutions and regulators. Compliance officers should review the report's findings on market structure, leverage, and interconnection to understand potential systemic risks. The policy implications section may lead to future regulatory changes or enhanced supervisory expectations regarding repo market activities and oversight.

What to do next

Review FSB report on repo market vulnerabilities and contagion channels.
Assess internal exposure and risk management practices related to repo markets.
Monitor for potential policy implications and future regulatory guidance from the FSB and national authorities.

Source document (simplified)

Publications Vulnerabilities in Government Bond-backed Repo Markets
Repo markets play an important role in facilitating the flow of cash and securities throughout the financial system. They allow some market participants to source required short-term funding or collateral and others to undertake short-term, low-risk investment of cash. At the same time, the structure and use of repo markets give rise to vulnerabilities. Borrowing through repo markets enables leverage, can lead to over reliance on short-term funding, and facilitates greater liquidity and maturity transformation. Additionally, repo markets serve as a key channel through which the financial system is interconnected. Recent stress events have highlighted how these vulnerabilities could amplify shocks quickly across the financial system.

This report assesses vulnerabilities in government bond-backed repo markets and possible contagion channels to the broader financial system

The report explains how repo markets function, outlines key features of repo markets around the world, assesses ways to monitor vulnerabilities and associated data gaps, and concludes with relevant policy implications.

Press Release

4 February 2026 FSB warns of financial stability challenges in repo markets

Report highlights vulnerabilities within repo markets, potential contagion channels and emphasises the need to preserve their functionality during periods of stress.