Frankfurt The bankruptcy of the Silicon Valley Bank in the USA and the problems of the major Swiss bank Credit Suisse have fueled fears of a new global financial crisis. The most recent turbulence raises the question of whether the financial system in the euro area can cope with the historic rise in interest rates over the past twelve months without serious upheaval.
The European Central Bank (ECB) considers the prospects to be fragile. “If we tighten monetary policy to combat high inflation, this can reveal vulnerabilities in the financial system,” warned ECB Vice President Luis de Guindos on Wednesday at the presentation of the central bank’s semi-annual Financial Stability Report.
In its report, the ECB identified the four biggest risks for the financial system. An overview:
1. Corporate and government debt problems
The sharp rise in interest rates is hitting some heavily indebted countries, companies and households particularly hard. Those heavily indebted countries that have relatively high short-term financing requirements are particularly affected.
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