On 12 September 2022, the Joint Committee of the European Supervisory Authorities published a report on risks and vulnerabilities in the EU financial system. The report highlights that the deteriorating economic outlook, high inflation and rising energy prices have increased vulnerabilities across the financial sectors.
The Joint Committee advises national competent authorities, financial institutions and market participants to take the following policy actions:
- Financial institutions and supervisors should continue to be prepared for deterioration in asset quality in the financial sector.
- The impact on financial institutions and market participants more broadly from further increases in policy rates and the potential for sudden increases in risk premia should be closely monitored.
- Financial institutions and supervisors should be aware and closely monitor the impact of inflation risks.
- Supervisors should continue to monitor risks to retail investors some of whom buy assets, in particular crypto-assets and related products, without fully realizing the high risks involved.
- Financial institutions and supervisors should continue to carefully manage environmental related risks and cyber risks.