The Federal Reserve's first financial stability report this year: There are a lot of liquidity risks in the financial market, and stablecoins are still vulnerable to bank runs

The Federal Reserve warned on Monday that banking concerns about slowing economic growth could lead to a drop in lending, which could accelerate the economic downturn, in its first financial stability report since the collapse of four regional banks.

The report said bank funding remained relatively stable overall, but there were significant liquidity risks in other corners of financial markets. "Overall, domestic banks have ample liquidity and limited reliance on short-term wholesale funding," the report said. "Structural vulnerabilities remain in short-term funding markets. Prime and tax-exempt money market funds, as well as other cash investment vehicles and stablecoins, remain vulnerable to runs. Life insurers face elevated liquidity risks as the share of risky and illiquid assets remains high." (BlockBeats)