ECB: Euro area financial stability environment remains challenging
The European Central Bank (ECB) is out with its Euro area Financial Stability Review, with the key highlights noted below.
Top stability risks include weak bank profitability, increased risk-taking among shadow banks.
Search for yields across shadow banking may exacerbate the build-up of vulnerabilities.
Residential real estate overvaluation exceeds 7%; commercial real estate price growth cooling but valuations still stretched.
Public debt positions manageable currently, despite deteriorating macroeconomic environment.
The shared currency pays little heed to the ECB report, as EUR/USD tests the key 1.1050 support amid broad-based US dollar strength induced by risk-aversion, in response to the latest US-China political woes.
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