The European Systemic Risk Board (ESRB) has identified a number of severe risks to financial stability which may materialise simultaneously amplifying their impact. The Warning calls for resilience in the financial system to be preserved or enhanced in order to support the economy if these risks materialise.
The probability of tail-risk scenarios materialising has increased since the beginning of 2022, and has been exacerbated by recent geopolitical developments. A pronounced deterioration in economic activity could lead to a renewed increase in credit risk at a time when some credit institutions are still in the process of addressing COVID-19 pandemic-related asset quality issues that have so far been limited due to extensive public support measures.
ESRB warning, 22 September 2022 Download PDF.
- European Banking Authority: EBA thematic note on EU banks’ residential real estate exposures, 10 October 2022.
- European Banking Authority: EBA Risk reports and other thematic work.