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LONDON, Oct. 8 (Reuters) – Historically high financial asset values could correct themselves sharply if investors reassess the outlook for recovery from COVID-19, with signs of increased risk-taking in investment banks, the Bank of England announced on Friday.
The BoE’s Financial Policy Committee (FPC) said in a statement that there was evidence that risk-taking remained high in a number of financial markets from historical levels.
“Asset valuations could undergo a sharp correction if, for example, market participants reassess the outlook for growth, inflation or interest rates,” the statement said.
“There are signs of continued relaxation of underwriting standards and increased risk-taking in some investment banking activities.” (Reporting by Huw Jones and William Schomberg; editing by Sarah Young)
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