Bank of England – Financial Stability Report, June 2013

by Sabrina I. Pacifici on July 13, 2013

“For much of the period since the previous Report, prices of risky assets rose and balance sheets across the financial system strengthened. More recently, however, asset prices have fallen and financial markets have been volatile, reflecting shifting expectations of the path of monetary policy in some of the major advanced economies. The outlook for financial stability is still clouded by risks from a weak and uneven global recovery, and imbalances in the euro area. In the near term, risks could crystallise if global long-term interest rates were to rise abruptly from current still historically low levels, or if credit spreads were to widen. Further out, risks could accumulate if a search for yield intensifies and assets become progressively mispriced. Market participants have increasingly highlighted concerns about operational risk, including threats of cyber attack. And confidence in the financial system remains fragile with weak credit growth.”

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