Stéphanie Stolz
Published: 2020
Total Pages:
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In 2019 macroprudential policymakers continued to operate in an environment of elevated financial stability risks. Generally, the macro conditions remained a source of concern: first, the medium-term outlook for global economic growth remained weak amid elevated (geo)political and policy uncertainties; second, asset prices continued to be subject to the threat of a sudden reassessment of risk premia; third, slowing growth momentum and rising risk premia could further test debt sustainability in the public and private sectors across the European Union (EU); and fourth, over time, the macroeconomic environment might pose fundamental challenges to traditional business models of EU banks, insurers and pension schemes. Furthermore, these vulnerabilities might be exacerbated by the implications of the current low or even negative yield curve. Finally, risks to financial stability might result from climate change, cyber incidents and disruptions in critical financial infrastructures.1 Against this backdrop of elevated risks, macroprudential policymakers used the tools at their disposal to target risks in the banking sector and beyond. Most macroprudential measures were taken to address arising or prevailing cyclical risks in the banking sector. However, the growing importance of the non-bank financial system has resulted in an increased focus on assessing and tackling risks and vulnerabilities beyond the banking sector. This Review provides an overview of developments in the macroprudential policy framework and of the macroprudential measures for both banks and non-banks that were adopted or were in place in 2019. The Review also provides a light-touch update on the release of the countercyclical capital buffers and the recalibration/removal of other capital buffers for banks in the light of the COVID-19 pandemic which had been announced by 31 March 2020. The Review covers actions of EU institutions, EU Member States or Member States of the European Economic Area (EEA), i.e. EU Member States plus Iceland, Liechtenstein and Norway, if information is available to the ESRB.