The European Central Bank has warned the “elevated vulnerabilities” in the non-bank financial intermediation (NBFI) sector could result in spillovers to the eurozone banking sector.
In its latest Financial Stability Review, the central bank said the increasingly close links between the two sectors have been beneficial since the Global Financial Crisis but, at the same time, they have increased the transmission of financial stress between them. The ECB noted banks' asset exposure to NBFI companies "are considerable", accounting for an average of roughly 9% of significant institutions' total assets. ECB probes eurozone banks on Silicon Valley Bank-style interest rate risks - reports Large banks are also "more strongly linked" to NBFI entities, with 80% of fundin...
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