MNI BRIEF: Covid Lower Even Longer Fears Add To ESRB Concerns

The Covid-19 crisis may mean interest rates could go even lower for longer, adding to existing financial stability fears caused by the low interest environment, a report by the European Systemic Risk Board, published Tuesday concludes.

Key vulnerabilities identified in the study, which updates 2016's ESRB report, include bank profitability and resilience; borrowers' indebtedness and viability, as the search the yield leads to rising debt burdens; systemic liquidity risk, as the market becomes increasingly sensitive to both shocks and structural changes; and the increasing pressure exerted on insurers and pension funds offering longer-term guarantees.