ESA Joint Committee publishes report on risks and vulnerabilities in EU financial system

The Joint Committee of the European Supervisory Authorities (ESAs) has published its Spring 2016 report on risks and vulnerabilities in the EU financial system.

The report highlights three main risks:

• low profitability of financial institutions in a low yield environment;
   
• increasing interconnectedness of bank and non-bank entities; and
   
• potential contagion from China and other emerging markets.

The report makes recommendations for national supervisors to address these risks, including enhanced supervisory monitoring and increased scrutiny of business models.