Structural risk indicators for the Spanish banking sector

Carmen Broto and Mariya Melnychuk

Financial Stability Review, 2022, issue Autumn

Abstract: Structural risks are long-term non-cyclical risks stemming from the structural characteristics of the financial system and the wider economy. In this respect, the systemic risk buffer (SyRB) is a fairly flexible macroprudential instrument that aims to address such risks. However, the European Union (EU) legislation is still flexible regarding the indicators for activating or releasing this buffer. Although a clear definition of these indicators is key to enabling the early detection of vulnerabilities that may lead to a crisis, in practice, each national authority determines its own set of indicators. This article has a dual aim. First, to select a set of indicators that are relevant for regularly monitoring the Spanish banking sector’s structural risks and, second, to develop a heatmap of structural indicators comparing variables for Spain with those for the EU. The empirical evidence suggests that the Spanish banking sector shares most of its structural features with those of the EU economies. According to the analysis, no structural risks are identified at present that might threaten the Spanish banking sector.

Date: 2022
Note: 43
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