Against the backdrop of the rapid expansion of private credit and its recent emergence as a source of investor concern, particularly in the United States, understanding the structure and vulnerabilities of private credit markets has important implications for financial and macroeconomic stability, including in Europe. This briefing provides an overview of the size, growth, and main features of the global private credit market, with a focus on the United States and Europe, and assesses the channels through which risks could affect financial stability. The first part outlines recent developments in private credit, including its growth as a major asset class, investor base, and return profile. The second part assesses key vulnerabilities, including risks, valuation uncertainty, leverage, data gaps, and growing interlinkages with bank and non-bank financial institutions. It also examines sectoral concentration, particularly exposure to software, AI-sensitive borrowers, and AI-related infrastructure financing. Finally, the briefing considers policy implications, highlighting the need to improve transparency, close data gaps, strengthen monitoring of exposures to banking and non-banking financial institutions, and ensure that risks are effectively assessed, priced, and disclosed, while preserving private credit’s role as a source of business financing. Source : © European Union, 2026 - EP Read more