Financial Stability Review 2022 I

Following a rapid economic recovery from the pandemic downturn, Russia’s invasion of Ukraine has led to lower global growth expectations and intensified inflationary pressures. Since the last Review, global financial conditions have tightened considerably, amid the beginning of a period of monetary policy normalisation. This follows a prolonged period of rising asset valuations and global indebtedness in a ‘search for yield’ environment, increasing underlying vulnerabilities to a sharp tightening in financial conditions. Domestically, price pressures coupled with a tight labour market point to emerging cyclical pressures in certain sectors, including the housing market. Profitability in the banking sector has recovered while new lending volumes continue to recover from pandemic lows. In light of the evolution of the risk environment since the depths of the pandemic shock, the Central Bank is gradually rebuilding macroprudential capital buffers through an increase in the countercyclical capital buffer (CCyB) to 0.5 per cent.

See also:

• Previous Financial Stability Reviews
• Press Release on Financial Stability Review
• Opening Remarks by Governor Makhlouf FSR 2022 I
• FSR 2022: I Presentation
• FSR 2022: 1 - Analyst Transcript