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The global banking system looks ready to withstand weaker economic growth and tighter financial conditions, global banking regulators say.

Following a two-day meeting to assess systemic risks and discuss ongoing policy work, the Basel Committee on Banking Supervision said banks have generally remained resilient in the face of high inflation and a deteriorating growth outlook.

“While rising interest rates are expected to support intermediation revenue on the one hand, the risk of persistently high inflation and possible economic downturns could test banks’ resilience,” the group said in a statement.

It called on banks and local regulators to “remain vigilant” as economic and financial conditions evolve.

The Basel Committee also discussed the risks that arise from the shadow banking sector and its connections to the mainstream system.

“Recent episodes of [shadow bank] distress have highlighted the potential spillover of risks to the banking system,” it said.

Additionally, they discussed the condition of cryptoasset markets, and recent call from the Basel Committee’s oversight group, the Group of Governors and Heads of Supervision, to finalize capital rules for crypto by the end of the year.

The committee also pledged to publish followup reports examining how well the Basel III capital rules worked following the turmoil inflicted by the onset of the Covid-19 pandemic in early 2020.