MNI BRIEF: Covid Third Wave Leaves Stability Risks High - ECB

Risks to financial stability remain elevated as a result of the uneven impact of the Covid-19 pandemic's third wave on particular countries and sectors, May's edition of the European Central Bank's Financial Stability Review concludes. There are concerns over banks' asset quality, the potential for worsening credit risk and the effects of any disorderly financial market corrections on non-bank financial institutions exposed to weak corporates, as discussed by for BIS staffer Philip Turner in a recent interview with MNI.

"A higher corporate debt burden in countries with larger services sectors could increase pressure on governments and banks in these countries," ECB vice president Luis de Guindos said, adding that "extensive policy support, particularly for corporates, could gradually move from being broad-based to more targeted."