How healthy is the global financial system? | Mohamed El-Erian

Policies to shore up the banking system have paid off in the US and the UK, with Europe catching up, but some big risks still remain

In recent weeks, policymakers on both sides of the Atlantic have affirmed that the financial system is sound and stable. The US Federal Reserve announced in June that all US banks passed its latest annual stress test. And the Fed chair, Janet Yellen, has now suggested we might not experience another financial crisis "in our lifetimes".

At the same time, the Financial Stability Board (FSB) - which monitors regulatory practices around the world to ensure that they meet globally agreed standards - has declared, in a letter to G20 leaders, that "toxic forms of shadow banking" are being eliminated.

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