CESR publishes report on trends, risks and vulnerabilities in financial markets

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03 Aug, 2010

The Committee of European Securities Regulators (CESR) has published a report on trends risks, and vulnerabilities that are directly relevant to securities markets regulators. Over the last decades, financial markets have been transformed by the rapid development of new financial instruments, the rise of new categories of key market participants, and a supportive technological environment. More recently, fundamental areas of the financial sectors have experienced a severe crisis. Going forward, CESR would like to contribute more to the understanding of these trends and risks and communicate its insights to the general public through regular reports.

The following findings, which are supported by thirteen detailed key trends, risks and vulnerabilities, are highlighted in the report:

  • In light of some global positive signs [...] a tendency to downplay the severity of the current crisis may emerge, accompanied by a reluctance to recognize the need for financial reforms. There is therefore a risk that urgently required regulatory measures are neither fully considered nor implemented in an appropriate way.
  • In fact, there are non negligible risks of a new deterioration in securities markets ahead [...]. [However, an] improvement has apparently been fuelled by the implementation of tough fiscal adjustment programmes in most European countries and the authorities' commitment to carry out stress tests in a significant number of European financial institutions and disclose the results.
  • The persistency of severe strains in the financial system was particularly evident in the fact that banks were still relying on the ECB's deposit facility for amounts which significantly exceed those observed in the aftermath of the Lehman default.
  • The financing requirements of countries and companies may become an issue in the near term.

Click for press release (PDF 120k). The report itself is available on CESR's website (PDF 3,310k). We have more information on the financial crisis on our credit crunch page.

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