ESMA Publishes Risk Dashboard for Third Quarter of 2020
ESMA published the risk dashboard for the third quarter of 2020. The dashboard shows that financial markets in EU continued their recovery in the third quarter of 2020 but remain highly sensitive, as the recent volatility spikes around COVID-19 developments and uncertainties around the US election outcomes show. Credit rating downgrades have been slowing and investment funds recorded inflows across asset classes, especially for bond funds. Looking ahead, ESMA sees a prolonged period of risk to institutional and retail investors of further, possibly significant, market corrections and see very high risks across the whole of ESMA’s remit. The low-for-long interest rate environment is also expected to weigh on the profitability and solvency of banks and insurers.
During the third quarter of 2020, EU financial markets continued their recovery and equity market valuations edged up further. There are increasing signs of strong geographical and sectorial differentiation across financial markets, with fixed-income markets seeing large-scale valuation increases across various segments such as emerging markets, investment grade, and high yield. These developments, taken together, highlight the ongoing risk of decoupling between asset valuations and economic fundamentals. Thus, the potential for a sudden reversal in investor’s risk assessment is the key risk currently seen for EU financial markets and ESMA maintains its risk assessment. The extent to which the identified risks will further materialize will critically depend on three drivers:
- Economic impact of the pandemic
- Market expectations on monetary and fiscal support measures
- Any occurrence of additional external events in an already fragile global environment
Related Links
Keywords: Europe, EU, Banking, Securities, Risk Dashboard, COVID-19, Credit Ratings, Credit Risk, Market Risk, ESMA
Featured Experts

Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
BCBS Publishes Details on G-SIB Assessment for 2020Related Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.