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The Funding Chain Paradox: European Banks, Private Credit, and the Backstop That Depends on What It Replaces
Research Sascha Steffen Research Sascha Steffen

The Funding Chain Paradox: European Banks, Private Credit, and the Backstop That Depends on What It Replaces

Private credit acts as a countercyclical backstop for the real economy — but that backstop is itself funded by the banking system. Drawing on two new papers and a presentation to the ESRB Advisory Scientific Committee, I trace the funding chain from European G-SIBs through BDC credit facilities to middle-market borrowers, and explain why facility-level transparency matters before the next downturn, not after it.

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