Signs of excessive financial risk-taking as well as slowdown in bank profitability are some of the biggest challenges in the euro area, the ECB said on Wednesday.
However, the central bank returned to its easing stance in full force in September this year as prices and growth rates are treading water.A sculpture depicting the Euro logo is pictured in front of the former headquarter of the European Central Bank in Frankfurt, Germany, on Feb.
The central bank had already warned in May of "persistent downside risks," which included global trade uncertainty and the U.K.'s departure from the EU. According to the central bank, institutions such as investment funds and insurance companies have been more risk-taking in the current low interest rate environment. This means that in case of a sudden market shock, for instance, stress among these institutions could spread to the wider financial system – leading to losses for companies and individuals.
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