2023-10-22 12:00:43
The vice president of the European Central Bank (ECB), Luis de Guindosstated this week that the financial stability of the eurozone is “fragile” since the sector is still getting used to the consequences derived from a monetary tightening policy undertaken at an “unprecedented pace.”
«The prospects for financial stability in to the euro zone “They are fragile, as the financial system adapts to an environment of higher interest rates,” explained the former Spanish Minister of Economy. Likewise, he has pointed out that the real estate market is in decline and the economy is slowing down.
Guindos has stressed that, although the impact of higher financing costs, high inflation and sluggish growth take time to manifest, companies and families have not had to endure, for the moment, “material stresses.”
Furthermore, the vice president of the ECB has stated that bank capital positions in the eurozone are “solid”, as demonstrated by the stress tests carried out in 2023 and which confirm that the sector “is capable of facing a seriously adverse scenario.”
On the other hand, Guindos has assured that “it is not yet the time” to think about releasing capital buffers because banking entities are “resilient” and “profitable.” In fact, they have double-digit financial returns for the first time since the 2008/2009 crisis.
“Although bank credit has lost momentum, there is currently no indication that this is because banks are subject to capital constraints that should be eased with macroprudential policies,” he elaborated.
Guindos has also indicated that, in the current context, the release of these capital reserves would make no sense since “it would not have a beneficial effect on credit.”
On the contrary, he has advanced that it is advisable to maintain them since it has a positive impact on financing, encourages the “prudent” allocation of resources and “preserves strength and confidence” in the banking system at a time when the risks are upward.
#Guindos #ECB #considers #stability #eurozone #fragile