The Board of Governors of the Federal Reserve System (FED) a report that assesses the stability of the financial system in the United States. The report reviews vulnerabilities related to valuation pressures, borrowing by businesses and households, financial leverage, and funding risk. It also highlights several near-term risks that, if realized, could interact with these vulnerabilities. Additionally, FED published results of the October 2021 Senior Loan Officer Opinion Survey on bank lending practices; the survey focused on changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the third quarter of 2021.
Regarding loans to businesses, respondents to the October survey, on balance, reported easier standards and stronger demand for commercial and industrial loans to large and middle-market firms over the third quarter. Banks also reported easier standards for commercial and industrial loans to small firms, while demand from small firms remained basically unchanged. For commercial real estate, banks reported easier standards for all loan categories. Banks also reported stronger demand for multi-family loans and for loans secured by nonfarm nonresidential properties, while demand for construction and land development loans remained basically unchanged. For loans to households, banks eased standards across most categories of residential real estate loans, on net, and reported weaker demand for most types of residential real estate loans over the third quarter. Banks also eased standards across all three consumer loan categories—credit card loans, auto loans, and other consumer loans—while reports on demand for consumer loans were mixed.
The survey included a set of special questions enquiring about the current level of demand relative to pre-pandemic levels (defined as the end of 2019) for commercial and industrial and credit card loans as well as banks’ outlook for demand for such loans over the next six months. On balance, banks reported weaker levels of demand for all queried commercial and industrial and credit card loan categories compared with the end of 2019. Banks expect stronger demand for both commercial and industrial and credit card loans over the next six months.
Keywords: Americas, US, Banking, Lending, Financial Stability Report, Credit Risk, Residential Real Estate, Commercial Real Estate, Survey Results, RRE, CRE, FED
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.