July 09, 2018

ESRB published its seventh annual report, which details its achievements and activities between April 01, 2017 and March 31, 2018. During this period, ESRB continued its close monitoring of sources of systemic risk in the European financial system and economy. As part of this work, ESRB analyzed developments in the commercial real estate and the non-bank financial sectors.

The annual report highlights that ESRB identified key risks to financial stability in the EU, which were re-pricing of risk premia in global financial markets; weaknesses in balance sheets of banks, insurers, and pension funds; debt sustainability challenges in sovereign, corporate, and household sectors; and vulnerabilities in the shadow banking system and contagion to the wider financial system. These risks formed the basis for the adverse macro-financial scenario that ESRB provided to EBA for the 2018 EU-wide banking sector stress test. These risks were also reflected in the adverse scenarios that were provided to EIOPA for the 2018 insurance sector stress test. Details of these scenarios are provided in the annual report.

Other key achievements of ESRB during the year are as follows:

  • ESRB published a recommendation designed to address systemic risks related to liquidity mismatches and the use of leverage in investment funds; a report discussing the financial stability implications of IFRS 9; and a report on resolving non-performing loans (NPLs) in Europe.
  • Another contribution to the macro-prudential framework for banking came in the form of an opinion, which ESRB provided to EC on macro-prudential structural buffers. 
  • ESRB responded to an ESMA consultation on draft guidelines on anti-procyclicality margin measures for central counterparties.
  • ESRB identified areas where the Solvency II framework could be enhanced and advocated the development of a harmonized recovery and resolution framework for the insurance sector across EU.
  • ESRB also held the second Annual Conference in September 2017 to facilitate discussion and further develop conceptual thinking about macro-prudential policy. The panel discussions focused on legal perspectives on macro-prudential regulation and the conduct of macro-prudential policy beyond banking. There were sessions on the challenges and future of banking in EU, how to address NPLs in the EU banking sector, and monitoring of risk in the shadow banking system.


Related Link: ESRB Annual Report (PDF)

Keywords: Europe, EU, Banking, Insurance, Annual Report, Macro-prudential Policy, Systemic Risk, Stress Testing, ESRB

Related Articles
News

BIS Report Discusses Regulatory Issues Related to Big Techs in Finance

BIS has pre-released a chapter of the BIS Annual Economic Report; this chapter focuses on the risks and opportunities presented by large technology firms (big techs) in the financial services sector.

June 23, 2019 WebPage Regulatory News
News

IOSCO Report Examines Liquidity in Corporate Bond Markets

IOSCO published a report that examines the factors affecting liquidity, under stressed conditions, in the secondary corporate bond markets.

June 21, 2019 WebPage Regulatory News
News

FED Publishes Results of the 2019 Stress Tests for Banks

FED published a report presenting results of the Dodd-Frank Act Stress Test (DFAST) exercise for 2019.

June 21, 2019 WebPage Regulatory News
News

BCBS Report Examines Global Pillar 2 Supervisory Review Practices

BCBS published a report that examines the Pillar 2 supervisory review practices and approaches in Basel member jurisdictions.

June 21, 2019 WebPage Regulatory News
News

IASB Publishes Work Plan and Meeting Updates for June 2019

IASB published an updated work plan and a summary of its June meeting, which presents preliminary decisions of the Board.

June 21, 2019 WebPage Regulatory News
News

HKMA Publishes Banking Exposure Limits Code Under Banking Ordinance

HKMA issued a circular to all authorized institutions informing that the Banking (Exposure Limits) Code has been published in the Gazette on June 21, 2019.

June 21, 2019 WebPage Regulatory News
News

OSFI Proposes Guideline on Internal Model Oversight for Insurers

OSFI proposed the draft guideline E-25 on the internal model oversight framework for federally regulated property and casualty (P&C) insurance companies.

June 21, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Third Update for June 2019

Under the Single Rulebook question and answer (Q&A) updates for this week, EBA published one answer regarding the calculation of institution-specific countercyclical capital buffer rates.

June 21, 2019 WebPage Regulatory News
News

BCBS Publishes Summary of the Meeting in June 2019

BCBS published a summary of its June meeting in Basel.

June 20, 2019 WebPage Regulatory News
News

OCC Bulletin on Risk Management Guidance for Home Mortgage Lending

OCC published Bulletin 2019-28 on risk management guidance for higher-loan-to-value (LTV) lending activities in communities targeted for revitalization.

June 19, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3298