CL (11/2023) The ESRB’s first general warning one year on Flashcards
What was the significance of the ESRB’s “general warning” issued twelve months ago?
The ESRB issued its first “general warning” in its 13-year history, signaling significant financial stability risks to European Union and national supervisory authorities.
What risks were outlined in the ESRB’s general warning in September 2022? Which risks identified by the ESRB have partially materialized since the warning? What financial risks have not materialized as warned by the ESRB?
The warning highlighted risks of drastic shortages in gas and oil, financial imbalances due to a rapid shift from low to higher rates, and the potential simultaneous materialization of risks amplifying each other’s impact.
Households have faced pressure on real disposable income due to high inflation, and there have been instances of sharp falls in asset prices, such as the failure of US-based regional banks and volatility in the gilt and US Treasury bond markets.
Despite concerns, EU banks have experienced higher profitability, non-performing loans remain low, and the residential real estate markets have been slowing down orderly.
What is the ESRB’s stance on the current financial situation?
The ESRB maintains a vigilant stance, emphasizing the importance of continued action to prevent risks from materializing. It warns against complacency, especially concerning bank profitability, vulnerable households, firms, and vulnerable nodes in the financial system.
How has the ESRB’s general warning impacted financial system resilience?
The warning has raised awareness among policymakers and supervisors, influencing their decisions and reforms in macroprudential and microprudential policies. It has also served as both a catalyst and an inhibitor in decision-making processes.
What is the ongoing role of the ESRB in relation to the general warning?
The ESRB continues to monitor developments carefully and remains committed to working with the EU financial stability community to ensure that the warning helps avoid damage to the economy.
