On 5 October 2023, the General Board of the European Systemic Risk Board (ESRB) announced that it held its 51st regular meeting on 28 September 2023.

The meeting highlighted the following key points:

  • The ESRB concluded that financial stability risks in the EU have remained broadly unchanged since its last meeting in June 2023.
  • The EU banking sector is well positioned to face the challenges arising from the risk environment. This was also demonstrated by the recent European Banking Authority stress test, which showed that European banks would remain resilient under the adverse scenario that assumes heightened geopolitical tensions and strong adverse effects from high inflation and higher interest rates.
  • However, for the banking sector: the weak macroeconomic environment may put a strain on asset quality; the increase in bank funding costs could weigh on net interest income; and reduce credit demand on the back of the subdued growth prospects is likely to curtail lending volumes.
  • The ESRB Board also discussed the general approach to designing adverse scenarios for the one-off climate risk scenario analysis.