ECB’s Enria: Uncertainty has abated, economic system on a path to recovery
“Uncertainty has abated and, by all indicators, the economic system is on a path to recovery,” the European Central Bank (ECB) top supervisor Andrea Enria said on Friday.
Additional comments
“Banks’ asset quality will deteriorate when the bulk of the public emergency support is withdrawn, but most likely by less than initially estimated, as this is difficult to quantify.”
“Evidence of mispricing of risk in some market segments was already present before the pandemic, and the appetite for financial leverage and financial complexity had also been growing.”
“The interconnectedness with other financial entities can expose the banking sector to potentially large direct and indirect losses if these exposures are not properly managed.”
“The resurgence of collateralized loan obligations is a prime example of.”
“Vulnerabilities could potentially be building up among a subset of supervised entities that were very active on the market.”
“Latest available evidence points to concerningly 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.”