Report
In reality, there should be more risk-taking in euro-zone finance
House holds in the euro zone want to have mainly short-term, risk-free savings. But investments are increasingly large, long-term and risk y (smart grids for electricity distribution, investments in renewable energies, the manufacture of electric batteries, etc.). Short-term, risk-free savings can only be transformed into long-term, risky investments if the financial sector is capable of performing this transformation of savings. However : Market-based financing of risky investments does not provide households with risk-free savings. This calls for b ank intermediation; Banks in the euro zone must therefore be able to finance large, risky investments, which is doubtful given the decline in their profitability. Banking regulators must therefore look to restore euro-zone banks’ capacity to perform large-scale intermediation (in terms of both duration and risk); Regulation will also have to verify the transparency of risk taken by banks, and that the risk premia in loan interest rates correspond to the level of risk taken.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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