EIU - The End of Easy Money

The report suggests that rising interest rates will strain the world's banking systems, but not lead to a repeat of the 2008-09 financial crisis. While interest rate hikes will raise margins, they will also increase bad debts and bond losses. Regional banks in the US remain vulnerable, and more bank failures are likely, which could lead to market consolidation and concentration risk. Emerging markets face their own risks from the interplay of bank and sovereign debt. Regulation and oversight will strengthen further, but regulators will be keen to avoid rescuing every bank and raising moral hazard. Bank lending will continue to expand but slow down in the US and Europe. Overall, while there are substantial risks, the report suggests that the banking industry is unlikely to collapse due to rising interest rates.