Financial leaders must prepare for risks such as Brexit, the regulator believes

Global authorities gathering in Washington this week must stand ready to address emerging risks including a global economic downturn and Brexit, the leading body for global financial stability has warned.

The Financial Stability Board – which was formed after the 2008 banking crisis that brought the financial system to its knees – said that while much has been achieved in the past decade, its job was “far from complete”. It also warned of new dangers, including higher levels of corporate debt, weaker lending standards, and cyber-attacks.

In an open letter to G20 finance ministers and central bank governors, FSB chairman Randal Quarles suggested that a long period of growth and rising asset prices had lulled institutions and firms into a false sense of security.

“The outlook for global growth has started to weaken and become more uncertain. Declining long-term interest rates have supported risky asset prices. Corporate and public debt levels continue to rise. And financial markets now expect very low, or even negative, interest rates to persist for the foreseeable future.

“These increasing risks meet a financial system that is much more resilient than it was before the financial crisis. However, the long period of sustained global growth and rising asset prices may have weakened the incentives to take precautions against unforeseen events,” he said.

The FSB boss said Brexit was also among the risks that leaders must be prepared to tackle.

“We need to be ready to address evolving risks to global financial stability, be they related to current downside risks to growth and uncertainties around Brexit, or structural changes in the financial system, such as the growing role of non-bank financial intermediation,” Quarles said.

The latest poll of UK finance chiefs showed that persistent uncertainty about how Brexit will unfold is increasingly knocking business confidence and making firms less prepared to invest.

Almost 60% of finance bosses surveyed by the accountancy firm Deloitte said cost cutting was a strong priority – the highest proportion in a decade.

Overall, 76% believe the UK business environment will be worse off as a result of Brexit.

The FSB’s letter is aimed at leaders gathered in Washington DC this week, where the International Monetary Fund and World Bank are holding their annual meetings. The finance ministers and central bank bosses of the G20 will hold their own meeting in the US capital on 17-18 October.

The Bank of England governor, Mark Carney, who formerly chaired the FSB, is expected to attend alongside the Bank of Japan boss, Haruhiko Kuroda, the World Bank president, David Malpass, Goldman Sachs’s chief executive, David Solomon, as well as the new IMF managing director, Kristalina Georgieva.

Carney and fellow governors have been told to keep a close eye on the impact of low interest rates, which have left investors searching for returns from riskier assets. The FSB said it is now developing a surveillance framework that will help assess those emerging dangers.

The letter also raised questions about potential risks linked to technological advances in the industry, includingthird parties and big tech firms entering the sector by providing essential services like cloud storage. Amazon has become a major player in banking, with its web services division picking up customers across the financial services industry.

The FSB plans to present its fifth annual report, which tracks reforms launched in the wake of the banking crisis, at the G20 finance ministers meeting later this week.

It is expected to highlight some progress: banks holding more capital as a cushion against losses, derivatives markets becoming more transparent, and asset-backed securities becoming less complex.

“Yet our mission is far from complete,” said Quarles. “This is certainly the case with respect to the agreed G20 reforms, where the implementation progress remains uneven across key reform areas, and where we are in the process of evaluating that reforms are working as intended.”