Rising geopolitical tensions threaten the adequacy of global credit ratings

Deutsche Bank experts have raised concerns about the functioning of the global credit risk assessment system. According to Jin10, banking analysts point to a critical discrepancy: amid increasing international tensions, investors are showing growing optimism, which creates a dangerous illusion of market stability.

Deutsche Bank Identifies Key Threats to the Credit Rating System

The study revealed a range of risks capable of leading to an overestimation of asset credit quality. First, the uncertainty associated with the new Federal Reserve policy could potentially revise lending conditions. Second, revolutionary advances in artificial intelligence create unpredictability for software and derivative financial instruments, affecting borrower creditworthiness assessments.

Tensions in Currency Markets and Their Impact on Credit Systems

The third significant tension factor is the strengthening of the euro. This phenomenon directly undermines German business confidence in its prospects, reducing its solvency and, consequently, its ability to service credit obligations. This chain reaction could quickly transmit a wave of uncertainty through credit markets.

Scenario of Risk Materialization and Rating Downgrades

Deutsche Bank strategists warn that the realization of any of the described scenarios could lead to a significant downward revision of credit ratings. This would trigger a wave of asset revaluation and potentially provoke stricter lending conditions on a global scale. Thus, the current underestimation of risks by investors could result in a sudden correction at the first signs of any of the identified tension factors.