ECB warns against increasingly complex and opaque financial products

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Frankfurt (Germany), Sept. 8 (EFE) .- The European Central Bank (ECB) on Wednesday warned that banks are negotiating with “increasingly complex and opaque financial products”.

“European banks have so far emerged unscathed from one of the most difficult crises on record,” said Kerstin af Jochnick, member of the supervisory board of the European Central Bank (ECB), speaking at the summit banking. 2021, organized by the “Handelsblatt”, which was held digitally.

He warned, however, that the impact of covid-19 has yet to be fully reflected on banks’ balance sheets.

In addition, Jochnick added, the low interest rates which will last longer due to the pandemic have led European banks to take more risks to achieve more profitability.

Jochnick said that we had already started to see “an exuberance in the valuations of the assets of certain segments of the stock markets”, an increase in indebtedness and that “banks are dealing with increasingly complex and opaque financial products. “.

For this reason, banks could face problems in the event of a “sharp price correction”, directly through their holdings of risky assets or indirectly through their links with bond and equity funds and with other non-financial institutions. banking, according to Jochnick.

The ECB’s warnings are reminiscent of the financial crisis that erupted in 2007 over high-risk “unwanted mortgages” for low-credit customers, first in the United States and then in Europe because the loans had been securitized and sold all over the world.

DEPOSIT GUARANTEE SYSTEM

Santander President Ana Botín said from Madrid that it is necessary to move forward in the creation of a deposit guarantee system in Europe, the last pillar of the European banking union, despite the fact that it This is a controversial issue as some countries are opposed.

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