FRANKFURT (MNI) – The European Systemic Risk Board on Thursday
warned that “systemic risks remain high” and called on national and
European authorities to act in order to safeguard financial stability.
“Notwithstanding mitigating factors, such as the provision of
central bank liquidity and recapitalization initiatives, systemic risk
remains high,” the ESRB said in a statement.
“A further economic slowdown and an aggravation of the sovereign
debt crisis could endanger the resilience of an already stressed banking
sector, disrupt the provision of credit to the real economy and
exacerbate an already high systemic risk,” the ESRB warned.
“The fundamental challenges remain: limiting contagion between
member states across the EU; and promoting a macroeconomic strategy that
supports growth and fiscal consolidation,” the statement continued.
The board said that many of the necessary measures lie beyond the
remit of the ESRB and the European system of Financial Supervision, and
they must therefore be addressed by national authorities, who should act
“in unison, with speed and ambition.”
These measures should include viable mechanisms for the
recapitalization and restructuring of the banking sector based on
“increased consistent valuation and transparency about banks’ asset
quality; the imposition of strong conditionality on the relevant banks
with regard to the use of any publicly funded recapitalization; the
resolution of non-viable institutions.”
Authorities should also continue to build resilience among banks by
“requiring capital levels accumulated so far to be maintained and
encouraging banks to assume their responsibilities in financing the real
economy” and “ensuring a focus on banks’ leverage as well as
risk-sensitive capital adequacy measures for improving resilience,” the
report said.
–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com
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