ECB’s De Guindos warns of broad dangers in monetary sector


By Giancarlo Navach

CERNOBBIO, Italy (Reuters) – The European Central Financial institution (ECB) is monitoring broad dangers throughout the monetary sector and can act to protect stability within the euro space, ECB vice-president Luis de Guindos mentioned in a speech on Saturday.

De Guindos supplied reassurance on the established banking sector within the single forex zone, saying banks had sturdy capital and liquidity positions however he warned of wider risks elsewhere within the system.

“…In our view, vulnerabilities within the monetary system prevail within the non-bank monetary sector, which grew quick and elevated its risk-taking throughout the low rate of interest atmosphere,” De Guindos informed the Ambrosetti enterprise discussion board in northern Italy.

He mentioned coverage reforms to deal with these vulnerabilities have been vital.

“Precedence ought to be given to insurance policies that assist construct resilience within the sector, comparable to by decreasing liquidity mismatch, mitigating danger from leverage, and enhancing liquidity preparedness throughout a broad vary of establishments,” he mentioned.

The ECB has been elevating rates of interest to attempt to curb rising inflation however there have been issues that these greater borrowing prices are fuelling turmoil within the monetary markets.

De Guindos mentioned that headline inflation was more likely to decline significantly this 12 months however underlying inflation dynamics would stay sturdy.

“The suggestions between greater revenue margins, greater wages and better costs might pose extra lasting upside dangers to inflation,” he mentioned.

(Reporting by Giancarlo Navach; Writing by Keith Weir, modifying by Gavin Jones, William Maclean)