The European Supervisory Authorities (EBA, EIOPA, ESMA) have published their latest report, highlighting significant economic and geopolitical uncertainties that continue to shape the financial landscape. Financial institutions must remain cautious as key risks like credit risk, market volatility, and the effects of inflation persist.
Here are the report’s key takeaways:
- Credit Risk: A closer look reveals heightened risks across various sectors, with financial institutions advised to monitor exposure carefully.
- Monetary Policy: While markets are anticipating rate cuts, there is still uncertainty around the timing and impact of these decisions.
- Geopolitical Factors: Elections, international conflicts, and political shifts could cause sudden disruptions in the market, further complicating predictions.
- Cyber-Risks: In the wake of recent global IT disruptions, institutions are encouraged to strengthen their defenses against potential cyber-attacks.
The ESAs stress the need for financial institutions to remain vigilant and proactively manage these risks as they navigate the current climate. Preparedness is key in safeguarding against unexpected challenges.