The European Securities and Markets Authority (ESMA) published its latest report on risks to European securities markets on Monday, indicating that market risks for the region have increased to its highest level.
“This increase is due to high volatilities and fluctuating performances across asset classes — all of which translates into elevated risks for investors, market infrastructures and the financial system at large,” the ESMA report says.
At the same time, the ESMA’s credit risk indicators remain unchanged, also at very high levels. Liquidity risk remains at a lower level, but it is expected to intensify, according to the ESMA report, and contagion risk and operational risk also remain unchanged, at high and elevated levels, respectively.
The report says that the major risks remain: the improved but uneven economic outlook; ultra-low interest rates; high public sector indebtedness; and potential weaknesses in market functioning.