The securities, banking and insurance sectors in the European Union (EU) face multiple risks, the latest report on risks and vulnerabilities by the Joint Committee of the European Supervisory Authorities (ESAs) shows.
sudden repricing of risk premia as witnessed by the recent spike in volatility and associated market corrections;
uncertainties around the terms of the UK’s withdrawal from the EU; and
cyber-attacks.
The ESA report also reiterates their warning to retail investors investing in virtual currencies and raises awareness for risks related to climate change and the transition to a lower-carbon economy.
In light of the ongoing risks and uncertainties, especially those around Brexit, supervisory vigilance and cooperation across all sectors remains key. Therefore, the ESAs advise the following policy actions by European and national competent authorities as well as financial institutions:
Against the backdrop of the potential for sudden risk premia reversals, supervisory stress testing remains a crucial tool for the management of systemic risk – these tests are to…
