Regulatory Alerts2019-06-27
Added · Updated
Warning of the European Systemic Risk Board on medium-term vulnerabilities in the residential real estate sector in France
The European Systemic Risk Board identifies medium-term vulnerabilities in France's residential real estate sector as a source of systemic risk to financial stability, specifically citing high and increasing household indebtedness and deteriorating lending standards. The Board notes that while France has implemented a 0.5% countercyclical capital buffer, this measure is insufficient to curb household debt dynamics or lending standard deterioration. Consequently, the ESRB recommends that French national authorities consider additional pre-emptive actions, such as establishing explicit guidelines for lending standards or implementing formal borrower-based measures.