en en en en en en en ru en en en en en en en en ru en en en en en en en en en en en en en en en en en en en en en az en en en fr en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en en
LONDON — The 19 nations that share the euro are facing financial risks that are elevated and uneven, the European Central Bank warned Wednesday, and more targeted stimulus could be required as the region recovers from the coronavirus crisis.
The pandemic has hit different economic sectors with varying degrees of severity and speed, with tourism and hospitability among the most impacted. In its latest financial stability review, the ECB warned that this uneven shock is concentrating risks in very specific nations and parts of the euro zone economy.
“As the euro area emerges from the third wave of the pandemic, risks to financial stability remain elevated and have become more unevenly distributed,” ECB Vice President Luis de Guindos said in a statement Wednesday.
The euro zone’s central bank is particularly concerned about a higher corporate debt burden in countries with larger services sectors, because this could increase pressure on governments and lenders in these nations.
This could be a headache in the short term as governments lift their pandemic-related stimulus, such as furlough programs.
“As this support is gradually removed, considerably higher insolvency rates than before the pandemic cannot be ruled out, especially in certain euro area countries,” the ECB said in a statement.
“Extensive policy support, particularly for corporates, could gradually move from being broad-based to more targeted,” de Guindos suggested.
Another risk on the ECB’s radar is the recent surge in U.S. benchmark bond yields. This has already led the central bank to step up its government bond purchases in recent weeks, but the Frankfurt-based institution is still concerned that higher borrowing costs across the Atlantic will affect indebted corporates, households and nations in the euro area.
ECB President Christine Lagarde said at a press conference in March: “We are not doing yield curve control.”
However, the ECB is looking to avoid a premature rise in borrowing costs for euro area governments. This could derail the economic recovery in 2021, after the region’s gross domestic product contracted by almost 7% in 2020.
In addition, the ECB also warned Wednesday that bank profitability in the euro area is still “weak” and lenders might be forced to step up their provisions going forward.
“Bank profitability remains weak, while prospects for lending demand are uncertain. Bank asset quality has been preserved so far, but credit risk may materialise with a lag, implying a need for increased loan loss provisions,” the ECB said in a statement.
Previous articleWorld is ‘standing on the precipice’ of multiple crises
Next articleMark Denning treasury secretary
Biden administration eases sanctions to boost Iranian people’s internet access
US mobilizes allies to reject Russian annexation effort amid nuclear threats
Biden administration eases sanctions to boost Iranian people’s internet access
Meloni’s far-right alliance leads in Italian elections
Apple Store Festival Season Begins: Instant Discounts, Trade In Offers, Free Engraving, More
When are the NFL London Games 2022? Schedule, times, tickets, TV channels and live stream details as six teams head to the UK
Taylor Swift Accepts Songwriter-Artist of the Decade Honor at Nashville Songwriter Awards: Read Her Full Speech
Zelensky calls to remove Russia from UN Security Council
Taylor Swift Accepts Songwriter-Artist of the Decade Honor at Nashville Songwriter Awards: Read Her Full Speech
MLB 700 home run club: Where Albert Pujols will rank on baseball’s all-time career HR list
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Do not sell my personal information.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.