Banco de España: Financial Stability Report – Autumn 2024
Date: November 5, 2024
Source: Banco de España
Summary:
The Banco de España published its Financial Stability Report for Autumn 2024, assessing the macroeconomic outlook, financial system risks, and policy recommendations for maintaining financial stability.
Key Findings:
- Economic Growth: The report projects moderate economic growth in the coming quarters, with a gradual recovery from the pandemic impact. However, risks to growth remain, including geopolitical tensions and supply chain disruptions.
- Inflation: Inflation is expected to remain elevated in the short term but is projected to moderate gradually. The European Central Bank (ECB) is closely monitoring inflation developments and implementing measures to bring it back to the target level.
- Financial System Risks: The report identifies several key risks to the financial system:
- Credit Risk: The rise in household and corporate debt poses risks to financial stability in the event of an economic downturn.
- Market Risk: Heightened volatility in financial markets, particularly in equity and bond markets, could lead to losses for financial institutions.
- Cyber Risk: The increasing reliance on technology by financial institutions makes them more vulnerable to cyber attacks.
- Policy Recommendations: The report emphasizes the need for continued vigilance and policy interventions to address financial stability risks. The recommendations include:
- Monitoring credit trends closely and implementing measures to mitigate credit risk.
- Strengthening the resilience of financial institutions to market risk and cyber threats.
- Ensuring that monetary policy continues to support financial stability while addressing inflation concerns.
Additional Highlights:
- The report highlights the importance of financial literacy and responsible borrowing among households and businesses.
- It emphasizes the need for continued coordination among financial regulators and authorities to effectively address cross-border risks and ensure financial stability.
- The report acknowledges the progress made in digitalizing financial services but cautions against complacency and the need to address potential risks associated with new technologies.
Conclusion:
The Banco de España’s Financial Stability Report provides a comprehensive assessment of the financial system and identifies potential risks and vulnerabilities. The report advocates for proactive policy interventions and collaboration among financial regulators to safeguard financial stability and promote economic growth.
D.G. Financial Stability, Regulation and Resolution. Financial Stability Report – Autumn 2024
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