The stock market is not immune to a very strong correction, warns the Banque de France. A stock market and financial crisis is the main risk weighing on the financial sector in the medium term, and it could increase, the institution warned on Monday (January 10) in its semi-annual report on financial risks. “Some stock market valuation indicators point to a persistent level of exuberance, which makes risky asset markets vulnerable to a sudden correction that could also potentially destabilize non-bank financial players using debt leverage and spread to others market segments, “the central bank said.
In other words: after a good year, the financial system is not immune to a stock market crisis. 2021 was indeed a year rich in records for the world stock markets, Paris having gained nearly 30%, its best annual increase since 2000, while in the United States, the extended S&P 500 index, the most representative of the market American, jumped 27%.
Of the five main risks identified by the institution, market risk is the only one whose probability is estimated to be “very high” – that of the others being considered “high” – and its development is expected to increase in the next six months. , as is the risk arising from high debt.
Nevertheless, the institutions have solid liquidity and “there is regulatory work, both in the European Union and in the fora of the G20 or the FSB (Financial Stability Board) to supervise (certain investment funds)”, wanted to reassure Sylvie Goulard, vice-president of the Banque de France, during a press conference.
Other risks identified by the central bank are high indebtedness, pressures on bank profitability and on the return on insurance investments, the risk of cyberattacks, and exposure to climate change.
Regarding cyber attacks, seen as a “systemic threat”, “the knowledge required to attack decreases as the sophistication of tools increases” and as they become more and more accessible on the internet, underlined Emmanuelle Assouan, Deputy Director General in in charge of the financial stability pole.
According to her, the economic impact of cyberattacks is estimated at around 1% of global GDP, and 25% of them target “agents of the financial sector”.
