In a speech at the 26th Euro Finance Week in Frankfurt on Monday 13 November, the Vice-President of the European Central Bank, Luis de Guindos, reviewed the monetary policy decisions of 26 October (see EUROPE 13280/8) and also took stock of the risks to financial stability and related macroprudential issues, against a backdrop of rising interest rates, tighter financing conditions and a slowing economy.
The Vice-President referred in particular to the spreads in government bond markets. In his view, they have remained limited, mainly because of cheap financing with longer maturities obtained by several governments when interest rates were still low.
However, Luis de Guindos warned: “Higher funding costs and less prudent fiscal policies could reignite concerns around sovereign debt sustainability, particularly in countries where debt levels are already high”.
The Vice-President also referred to the credit risk of certain non-banks exposed to interest rate-sensitive sectors or highly indebted companies with low earnings and low interest coverage ratios. Mr de Guindos particularly highlighted the vulnerabilities of certain companies in the commercial property sector.
Link to the speech: https://aeur.eu/f/9j6 (Original version in French by Émilie Vanderhulst)