Prof. Sascha Steffen is giving a talk about “Private Credit: Risks and Opportunities from the growth of privat credit” at the Advisory Scientific Committee (ASC) of the European System Risk Board.
The growth of private credit marks one of the most profound shifts in modern finance. What began as a niche source of loans to mid-market firms has evolved into a $2 trillion global system of nonbank intermediation—now rivaling the leveraged-loan and high-yield bond markets. The talk traces this transformation from traditional bank lending to an interconnected network where funds, insurers, and private vehicles have become central credit suppliers. Drawing on recent evidence and the case of First Brands Group, Prof. Steffen shows how the same flexibility that makes private credit valuable for firms also embeds new vulnerabilities: hidden leverage, opaque exposures, and liquidity mismatches that can spill back to banks. The discussion concludes with policy lessons for Europe—how to preserve the benefits of private credit while strengthening transparency, oversight, and resilience in this rapidly expanding part of the financial system.