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ESRB Report
ES­RB - sec­ond re­port on macro­pru­den­tial pol­i­cy is­sues aris­ing from the low in­ter­est rate en­vi­ron­ment

The European Systemic Risk Board (ESRB) has published a second report on macroprudential policy issues arising from the low interest rate environment in the financial system of the European Union (EU). Looking beyond recent cyclical developments, the coronavirus (COVID-19) shock may have increased the likelihood and persistence of a “low for long” scenario.

The risk analysis of the report identifies four areas of concern owing to the low interest rate environment:

  • profitability and resilience of banks
  • indebtedness and viability of borrowers
  • systemic liquidity risk
  • sustainability of the business models of insurers and pension funds offering longer-term return guarantees