ECB Financial Stability

: The negative side-effect of that though was the squeeze it was putting on insurance firms who are finding it increasingly difficult to find assets that pay out enough to cover their costs, and for banks in terms of their profitability, according to Euro News. The ECB message echoes similar warnings from the International Monetary Fund and one of Europe top regulators earlier this month. In its twice-yearly Financial Stability Review, the ECB also said risks from Greece for the euro zone governments had increased sharply but that their borrowing costs and growth prospects were being helped by measures like the ECB bond-buying programme. Such market conditions pose a significant challenge for some insurance companies’ profitability in the medium term, with the potential to erode capital positions in the long run, the ECB report said. Overall the ECB said there were four main risks to euro zone financial stability at present. The impact of the low interest rate environment is particularly relevant for those life insurers that have locked in high return guarantees and have large asset/liability duration gaps. (news.financializer.com). As reported in the news.