Weak growth potential threat to financial stability: ECB

27th November 2014, Comments 0 comments

Tensions within the eurozone's financial system have subsided in recent months, but weak growth could pose a potential risk to stability further down the line, the European Central Bank cautioned on Thursday.

"All the indicators of systemic risk in the eurozone are at very low levels, and some at levels similar to those before the crisis," the ECB's deputy president Vitor Constancio told a news conference on the presentation of the central bank's half-yearly financial stability review.

However this "belies a delicate situation, in which generally benign financial market sentiment has contrasted with a weak, fragile and uneven economic recovery," the ECB continued.

Very low interest rates were currently pushing banks and investors into taking risks in their search for yield, and that could lead to a resurgence of financial turbulence, the central bank warned.

The German Bundesbank had issued a similar warning earlier this week, saying the current low-interest-rate environment acted as an incentive for investors to engage in riskier behaviour.


© 2014 AFP

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