SEC Chair Gary Gensler has raised concerns about the $13 trillion sitting in offshore U.S. currency, posing potential risks to the stability of the American financial system.

Offshore Risks

During the Bloomberg Global Regulatory Forum, Gensler pointed out that much of this money held by foreign banks isn’t insured. This puts the U.S. economy at risk, especially given previous economic disasters like the 2008 financial crisis. He mentioned that offshore funds have prompted actions by the Federal Reserve, which has occasionally acted as a global savior.

Gensler on Private Credit

Gensler also turned his attention to the growing private credit sector, reaching $1.7 trillion, posing a potential new risk. There is increasing activity to offer private credit through ETFs, raising regulatory concerns due to lack of transparency.

U.S. Debt Hits $35.6 Trillion

Despite claims of financial stability for America, national debt continues to rise, now over $35.6 trillion. The federal deficit reached $1.8 trillion, complicating financial management, especially with rising interest rates. According to the IMF, global public debt levels are nearing $100 trillion, with the U.S. and China being major contributors.

The risks associated with offshore assets and the growing private credit sector have raised regulatory concerns and could potentially destabilize global markets.