With the interest rates at record low levels, real estate prices at many hit destinations have risen sharply. Some politicians warn that a suppressive monetary policy creates the risk of strong price rises in real estate markets that potentially leads to a new crisis, Reuters remembers.
"What could cause a new crisis? I do not know, but I guess this could be the real estate market," said Nouy, which was broadcasted by the Latvian news agency LETA.
"We know that there will be a new crisis, but we do not know when or where," the governor said.
Although banks are better capitalized, liquidity is abundant, and money is inexpensive, some banks are not successful in mobilizing the collaterals and obtaining additional liquidity on the markets when they are under pressure, she added.
We still do not have a deposit insurance system at the EU level, Nouy recalled and Hina reports.
"I know that some Northern European and Eastern European countries are looking for a more significant risk reduction in the eurozone banks before taking the next step, and I think the risks have already been significantly reduced, so now we have to make a step forward," she added.
Looking back at the Baltic states, Nouy warned that the rise in real estate prices posed a risk, just as the use of floating interest rates since there was no guarantee that the salaries and raises would grow along with interest rates.
This poses a greater risk to Nordic countries since the Scandinavian moneylenders are owners of many Baltic banks, the Governor added in ECB.
Text by Vijesti online, on September 6th, 2018, read more at Vijesti
