Bank of England: financial markets are facing a sharp correction

Financial markets remain at risk of a sharp correction, the Bank of England warned on Wednesday, citing the results of a survey showing that geopolitical events are considered the main threat to stability. 

The Bank of England's Financial Policy Committee has repeatedly pointed out that many financial assets, especially stocks, are overvalued and may decline significantly in the event of economic or geopolitical shocks.

According to a survey conducted in late July and early August, 93% of 55 banks and financial companies surveyed identified geopolitical risk as the main threat to the stability of the financial system. This figure has become a record in the history of the study, which has been conducted since 2008.

However, the Bank of England is concerned that this perception of risk has not yet been reflected in pricing in financial markets. The central bank also stressed the importance of financial institutions' preparedness for serious stresses that may well occur. In addition, the Bank of England noted the threat associated with high levels of public debt in different countries.