The Joint Committee of the European Supervisory Authorities (ESAs) has published its second bi-annual Report on Risks and Vulnerabilities in the European Union’s (EU) Financial System.
The Report has identified the following key cross-sectoral risks to the stability of the European financial system:
the weak macro-economic outlook;
the protracted low-interest rate environment;
EU financial sector fragmentation; and
reduced confidence in balance sheet valuations and risk disclosures.
These risks, already highlighted in the first Joint Committee’s Risk Report published in April this year, have increasingly been brought into focus following a series of developments that took place since then. In particular, increased volatility in longer-term interest rates and concerns about the future path of interest rates - combined with the current low interest rate environment - created uncertainty for financial institutions in their hedging and impacted profitability.
Read full ESMA Press Release.
