Europe, U.S. clash over disclosure of $2 trillion private credit risks

European financial supervisors ran into resistance from the U.S. Treasury as they sought more information on banks’ exposure to private credit, a market that has grown into a roughly $2 trillion pillar of corporate lending. The dispute went beyond paperwork: European officials wanted detail on the underlying borrowers, valuation methods and the guarantees behind the investments held by banks and funds.

Private credit’s limited transparency could leave losses hidden until stress spreads. Recent strains in the market, including redemption restrictions at some funds and a wave of corporate defaults, sharpened that worry. U.S. officials pushed back on broader data-sharing, arguing that some of the information was confidential and that new reporting demands would add unnecessary burdens for firms.

On May 6, the Financial Stability Board said private credit had expanded rapidly to an estimated $1.5 trillion to $2 trillion in assets at end-2024. The board also said available data across its members captured about $220 billion of drawn and undrawn bank credit lines to private credit funds, while some commercial estimates ran as high as $270 billion to $500 billion. Interconnections among private credit funds, banks, insurers and private equity firms are deepening.

European officials have tracked those links. The European Central Bank’s May 2026 Financial Stability Review included a special feature on stress in global private credit markets and its implications for euro area financial stability, pointing to recent pressure in parts of the U.S. market, including software-sector exposures and redemption pressure in semi-liquid vehicles. A separate ECB-ESRB report identified limited data on the balance sheets and financial risk of private credit funds as a key gap that hindered assessment of banks’ exposures.

The Financial Stability Board said it would deepen analysis of links between private credit, private equity firms and insurers, and examine liquidity mismatches in some private credit funds. Burkhard Balz of the Deutsche Bundesbank said supervisors around the world were facing pressure and objections to new reporting rules, while FSB spokesperson John Schindler said patchy data and differing definitions made private-credit risk hard to compare across countries.