The euro area’s fragile economy combined with investors’ hunt for higher returns poses a renewed threat to the region’s financial system, according to the European Central Bank.
“Systemic stress among euro area banks and sovereigns declined further to levels last seen before the onset of the global financial crisis in 2007,” the ECB said in its Financial Stability Review published today. “The economic recovery nonetheless remains weak, fragile and uneven -– and could potentially reinforce financial-stability risks against a backdrop of a global search for yield.”
