Investor complacency could breed systemic risks, ECB warns

Friday, 28 November 2014 01:24 - - {{hitsCtrl.values.hits}}

FRANKFURT (Reuters): The search for returns and investors’ complacency about risk could threaten financial stability, the European Central Bank warned on Thursday in a report that also singled out ‘frothy’ property prices as a potential problem. “Financial stability risks may arise from investor complacency especially during periods of weak returns on financial assets when investors hunt for yield. Such periods have the potential to breed systemic risks,” officials wrote in the euro zone central bank’s regular financial stability review. The report also singled out property prices. “Property market developments in both the residential and (prime) commercial segments in some countries have been frothy, leaving property markets vulnerable to correction,” it said. The report also addressed the challenges of sustaining high public debt, saying: “The work of restoring the soundness of public finances is unfinished.”