“Improved economic conditions have reduced near-term tail risks to financial stability,” the European Central Bank (ECB) said in its Financial Stability Review report released on Wednesday.
Additional takeaways
The remaining concerns relate to pockets of exuberance in credit, asset and housing markets as well as higher debt levels.
Corporate insolvencies could still rise but less than feared early in the pandemic.
Risks of property price corrections increased substantially amid rising estimates of house price overvaluations.
Outlook seems particularly poor for lower-quality commercial real estate.
Separately, Moody’s Investors Service said in its latest report, “Euro area sovereigns benefit from favorable economic conditions but debt levels could become a challenge.”
“Euro area's economy is recovering but an increase in bankruptcies or unemployment remains a risk,” the global ratings agency noted.
Market reaction
EUR/USD was last seen changing hands at 1.1311, down 0.06% on the day.
