“Uncertainty has diminished and, according to all indicators, the economic system is on the way to recovery“, said on Friday the superior supervisor of the European Central Bank (ECB), Andrea Enria.
Additional comments
“The asset quality of banks will deteriorate when most of the emergency public support is withdrawn, but it will most likely be lower than initially estimated as this is difficult to quantify.”
“Evidence of bad risk in some market segments was already present before the pandemic, and the appetite for financial leverage and financial complexity had also been growing.”
“Interconnection with other financial institutions can expose the banking sector to potentially large direct and indirect losses if these exposures are not managed properly.”
“The resurgence of secured loan obligations is a prime example of this.”
“Vulnerabilities could potentially be increasing among a subset of supervised entities that were very active in the market.”
“The latest available evidence points to worryingly low levels of price discrimination in relation to underlying credit quality.”
“A sudden correction in asset prices could take place if investors expect inflationary pressures to be persistent.”
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