The Financial Post reports in its Friday, March 6, edition that Bank of Canada Governor Tiff Macklem says military actions in Iran have heightened volatility in energy and financial markets. The Post's Barbara Shecter writes that Mr. Macklem said Wednesday that uncertainties surrounding the conflict, along with the rapid growth of private credit and leveraged trading by hedge funds outside the regulated banking system, add to these downside risks. He said: "Economic uncertainty is already high. We cannot afford to add financial instability to the mix." Non-bank financial players are crucial to sovereign debt markets, making up to 50 per cent of government bonds sold in Canada and significantly influencing the secondary market. While they enhance liquidity and efficiency in stable times, they also present risks during periods of stress. Mr. Macklem said: "The scale of these trades and speed at which they can unwind pose a systemic risk. ... Short-term funding strains could cause severe dislocations in sovereign debt markets -- the backbone of our financial system -- and the cross-border nature of markets means that stress that begins in one jurisdiction or sector can quickly move to another."