Global regulators are intensifying their focus on private markets even as the US moves to open 401(k) retirement plans to alternative asset classes.
According to Preqin data, 65% of the US$16.2 trillion private market fund assets under management in June 2025 was in private equity, and 11% in private credit.
In an analysis, law firm Baker McKenzie noted that private market assets have supported growth, but have also “made it more difficult to holistically assess systemic risk”, due to interconnections within the financial system and gaps in data. Particular risks include increased use of leverage and possible dangers of spillover from private markets to the banking sector.
Speaking at a Bloomberg forum last month, François Villeroy de Galhau, governor of France’s central bank, said private markets have good, bad, and ugly characteristics: they are significant, they are risky, and they may — or may not — be welcome in Europe.
He said that Europe has one additional systemic private markets problem compared to the US: it accounted for only 20% of global private equity capital raised in 2025. The euro area does have a savings surplus of $471 billion, which could and should be used to fuel increased venture investment and productivity.
To get the good without the bad or the ugly, Villeroy said regulation should highlight greater transparency, harmonise across Europe, and closely monitor the resilience of private markets. He also said that the Bank of France had followed the Bank of England by launching a euro-area stress test to assess financial system vulnerabilities.
Also last month, the UK’s Financial Conduct Authority released a report on the growth and regulation of private markets. Its priorities include engaging with private markets on their valuation practices, managing conflicts of interest between funds and their investors, and assessing risk management.
Other regulators studying the risks include the European Central Bank, which said that private markets’ links to banks “create channels through which shocks can be transmitted, amplified and redistributed across the financial system”. The Basel Committee on Banking Supervision is also looking closely at these markets.
While financial regulators worldwide clearly recognise the importance and value of private markets, they are also cognisant of the associated risks and are stepping up to address them.
