ESRB Annual Report 2018

Summary:

Annual Report published in July 2019 by the European Systemic Risk Board (ESRB), covering the year from 1 April 2018 to 31 March 2019. This is the eighth ESRB Annual Report.

Further information:

The four main risks identified are the same as last year, with the repricing of risk premia in global financial markets being the most prominent one, followed by persistent weaknesses in balance sheets of EU banks, insurers and pension schemes, debt sustainability challenges in EU sovereign, corporate and household sectors and, finally, vulnerabilities in the investment fund sector and risks from shadow banking activities. This is particularly relevant against a backdrop of policy uncertainties and faster-than-expected moderation of economic growth.

Further increases in residential and commercial real estate prices point to signs of overvaluation in some markets. The ESRB continued to advance the development of macroprudential policy. With regard to policy for the banking sector, the ESRB continued its assessment of and published two reports on the financial stability implications of IFRS 9. Following a request from the EU Council, the ESRB identified the main triggers, vulnerabilities and amplifiers that can drive system-wide increases in non-performing loans. With regard to policy beyond the banking sector, the ESRB identified options to further strengthen the macroprudential framework for (re)insurance and reviewed the financial stability implications of central counterparty interoperability arrangements.

In addition, the ESRB organised several events to foster discussion on macroprudential policy.