ECB: Euro area’s financial stability positive - UOB

Analysts at UOB Group explained that the European Central Bank (ECB) published its latest assessment of the Euro area’s financial stability. 

Key Quotes:

"According to the ECB, “The financial stability situation in the euro area has continued to evolve positively over the past six months. Improved economic conditions underpin the assessment that there is no generalized overvaluation in euro area financial markets”.

That said the ECB identified a number of risks to financial stability in the euro area, the most important of which were: (1) An abrupt and sizeable repricing of risk premia in global financial markets – triggered e.g. by a policy expectation shock – leading to a tightening of financial conditions (2) An adverse feedback loop between weak bank profitability and low nominal growth and (3) Public and private sector debt sustainability concerns amid a potential repricing of risk premia and increased political fragmentation."