By Guest Writer • 25 February 2022 • 11:08
Pablo Hernández de Cos in Paris
Credit: Bank of Spain
OLD risks new challenges and same objective says Bank of Spain Governor Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision.
Delivering the keynote speech at Eurofi High-Level Seminar 2022 in Paris on February 25, he said that the Committee will continue its work related to Covid-19, with a view to ensuring that banks remain resilient and contribute to the recovery.
The outlook continues to be marred by uncertainty and divergences across regions. Per capita incomes in 2023 will remain below their 2019 levels in nearly 40 per cent of emerging market economies, in contrast to advanced economies
He observed that while the global banking system has largely weathered the pandemic to date, it is crucial that banks remain alert to risks and vulnerabilities as the pandemic continues to unfold.
Debt levels – encompassing both public and private debt – are at an all-time historic high of nearly $300 trillion (€268 trillion) or 350 per cent of global GDP.
The unwinding of public support measures – which were critical in shielding banks from losses thus far – means that banks will have to increasingly rely on their own resources to absorb potential shocks.
The risks of a sharp house price correction triggered by changes in interest rates or financial costs will test banks’ resilience in the event of a debt overhang and economic slowdown.
In his opinion, the banking world must also learn from the experience of the past few years to help guide future areas of work.
Earlier in the week he once again warned investors of the risks associated with cryptocurrencies and the need for those dealing in them to be strongly regulated in order to protect both consumers and corporate investors.
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