On September 5, the Joint Committee of the European Supervisory Authorities (ESAs) published its second twice yearly report on the vulnerabilities of the financial system of the EU.

The report identifies a variety of cross-sector risks and builds upon the findings of the first report published in March 2013.  The report notes that a determined reaction from political sources and the European System of Financial Supervision (including the ESAs) are required to counter these threats.  It notes that despite measures being adopted, including the entry into force of the CRD IV legislative package, the risks identified in the first report continue to threaten the EU’s financial system, along with other ensuing events such as:

• Concerns over the volatility of longer-term interest rates, together with the future direction of interest rates and the current prevalence of low interest rates;
• Concerns over the risk of bail-in in future bank resolutions following the bail-out of Cypriot banks, which included a bail-in of deposits of more than the EUR100,000 deposit guarantee limit; and
• Cyber attacks on the online and mobile banking services of several banks in April and June 2013.