Financial markets have functioned well since Russia invaded Ukraine and the West hit Moscow with crippling sanctions, but markets are showing some signs of strain, U.S. Treasury Undersecretary for Domestic Finance Nellie Liang said on Monday.

Liang said in remarks to an Institute of International Bankers conference that strains are showing up in wider bid-ask spreads and slightly higher term unsecured funding costs.

"Investors are meeting elevated margin calls without delay. Moreover, investors show little concern about solvency or liquidity stresses at domestic financial institutions," Liang said her prepared remarks.

She said the Treasury and regulators that make up the Financial Stability Oversight Council are closely monitoring the market situation and talking to financial regulators in other countries.

"We will continue to be alert to fallout from the recent events," added Liang, a former longtime Federal Reserve economist.

Liang also said that U.S. regulators have worked over the past decade with global policymakers to establish regulatory and supervisory frameworks to ensure that financial systems are resilient and can support economic growth despite unexpected shocks.

"Clearly, the system now is much more resilient than when these efforts started," she said. "Regulators will need to be nimble in their approaches to ensure the financial system continues to be resilient as some key emerging risks look to be different from those in the past."