ECB Says Risk Of Return Of Debt Sustainability Concerns Increased
2017年5月24日 - 05:49PM
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Eurozone financial market stress remained contained in the past
six months, though the risk of further bond market repricing
remains and the risk of a return of concerns over debt
sustainability has risen, the European Central Bank said in a
report released on Wednesday.
Further, the ECB warned that excessive exuberance in regional
house prices, in particular in capital cities, could have spillover
effects into the national level and this warranted close monitoring
especially in a low interest rate environment.
"Risks to financial stability stemming from financial markets
remain significant, mainly owing to the possibility of a further
rapid repricing in global fixed income markets," the ECB said in
its latest Financial Stability Review.
"Such an abrupt repricing could materialize via spillovers from
higher yields in advanced economies, in particular the United
States."
The ECB drew attention to the further upward revisions of
Federal Reserve monetary policy expectations as a key factor that
can push long-term yields higher.
Other triggers could be a prolonged period of elevated political
uncertainty or higher-than-expected euro area inflationary
pressures causing investors to anticipate a faster normalization of
monetary policy conditions, the report said.
The bank said there are risks that euro area bond yields could
increase abruptly without a simultaneous improvement in growth
prospects. A potential repricing in euro area bond markets may lead
to substantial capital losses for investors with large exposures to
fixed income instruments, the report warned.
The central bank also cautioned about significant
vulnerabilities for euro area banks such as the challenge to
profitability from low interest rates and large stocks of
non-performing loans. These are in addition to structural
challenges including overcapacity, less income diversification and
cost-inefficiencies.
"Risks to euro area sovereign debt sustainability have increased
over the past six months," the ECB report said.
"In recent weeks, however, euro area spreads narrowed and
sovereign stress conditions improved somewhat following the result
of the presidential election in France."
Regional developments in house prices could have "ripple
effects" for the entire country or adjacent locations and could
signal a potential build-up of vulnerabilities in housing markets
at the national level, the ECB said in the report.
"Regional house price developments could pose challenges in the
medium term when accompanied by a strong growth of mortgage loan
financing amid weaker lending standards," the bank said in the
report.
The bank cited Austria, Germany, France, the Netherlands,
Estonia and Ireland as examples where house prices grew faster or
declined less in capital cities than at the national level in
recent years.
"Although diverging developments at the regional level could be
justified by fundamentals, such as differences in regional income,
employment, population dynamics and amenities, they could also
signal excessive exuberance of house prices in certain areas, for
example due to the strong presence of foreign buyers," the bank
said.
A close monitoring of regional residential real estate price
trends seems warranted, the bank added, more so in the context of a
low interest rate environment spurring a potential search for
yield.
"Exuberant house price developments in certain regions could, in
principle, threaten the stability of financial institutions with
mortgage exposures concentrated in those regions," the ECB said in
the report.
There was no clear evidence of convergence across or within euro
countries, the ECB said. The bank also noted that the price
increases in selected capital cities with estimated overvaluations,
including Berlin and Vienna, were more moderate than developments
previously experienced in capitals where house price exuberance was
followed by a correction, such as Madrid and Amsterdam.
Meanwhile, the "Brexit" process was currently not one of the
main concerns for euro area financial stability, the report said.
However, the ECB urged banks and other financial institutions to
implement transition plans to cope with the event in a timely
manner.
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