Journal Article
Short-term risks to financial stability
Publication details
Summary
Against the backdrop of heightened sovereign debt and banking concerns, and a weaker outlook for global growth, the short-term risks to financial stability have risen sharply over the past six months. If they persist, stressed funding conditions could make it difficult for banks with weaker balance sheets to meet their refinancing needs. They could also result in defensive bank actions that prove counterproductive for the wider financial system, including further tightening in credit supply in the euro area and the United Kingdom. That could depress economic activity and aggravate credit risks that to date may have been contained by forbearance.