Regulatory Alerts2022-09-22
Added · Updated
Warning of the European Systemic Risk Board on vulnerabilities in the Union financial system
The European Systemic Risk Board identifies severe systemic risks to financial stability, including balance sheet stress for non-financial corporations and households, sharp asset price falls, and deteriorating credit quality for banks. The document urges credit institutions to adjust capital projections and provisioning practices to account for expected and unexpected losses under adverse macroeconomic scenarios. It calls on national authorities to preserve or build up macroprudential buffers and utilize supervisory powers to mitigate risks where macroprudential tools are unavailable. Additionally, it requires non-bank financial institutions and market participants to strengthen risk management practices to address liquidity strains and cyber risks.