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MNI BRIEF: War Has Increased Financial Stability Risks - Knot

(MNI) London

Europe’s near-term growth outlook has deteriorated as a result of Russia’s invasion of Ukraine, challenging the prospects for a sustained and broad-based recovery from COVID-19 and increasing the risk of financial market strains caused by volatile commodity markets, Financial Stability Board chair and Dutch central bank head Klaas Knot said in a speech Tuesday.

Undetected leverage is another concern, Knot said, with certain banks prepared to take large positions without having sufficient visibility into the total leverage of their counterparties - a particular source of concern given the likelihood of tighter financing conditions (MNI INTERVIEW2: End of ECB Negative Rates In Sight- Knot).

Cyber attacks continue to be a source of risk, while the Russia-Ukraine war has reinforced pre-existing concerns about the growth and potential illicit use of crypto-assets. The FSB is however well placed to take a leading role in the design of a coherent global regulatory framework for crypto-assets, Knot said.

MNI London Bureau | +44 20 3983 7894 |
MNI London Bureau | +44 20 3983 7894 |

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