Interconnections between the Austrian banking sector and debt securities markets

Roberto Moshammer () and Michael Nawaiseh ()
Additional contact information
Roberto Moshammer: Oesterreichische Nationalbank
Michael Nawaiseh: Oesterreichische Nationalbank

Financial Stability Report, 2024, issue 48, 63-74

Abstract: Banks use debt securities markets to finance and refinance their activities and to manage liquidity. Debt securities offer many advantages regarding liquidity management, earnings stability and regulatory compliance. Yet, they also harbor risks in times of economic stress, as seen in the past in connection with bank collapses in the USA. Effective risk management and supervision are important to ensure that interconnected relationships do not compromise financial stability. It is therefore of great benefit if the requirements for issuing and holding financial instruments rest on a harmonized regulatory environment such as that provided by the European Union (EU). At the end of 2023, the majority of debt instruments issued by the Austrian banking sector were held by counterparties from the EU and the euro area. The securities on the banks’ books were also predominantly issued by counterparties from these regions. Refinancing from the EU and the euro area is crucial for the Austrian banking sector, as the strict European regulatory framework effectively reduces banks’ risk profiles. We use empirical data to show the most important trends over recent years (2017–2023). Austrian banks’ debt instruments grew significantly, with the volume of debt securities holdings increasing by 12.3% and that of debt securities issues surging by 50.6%. The counterparty composition shifted on both sides of the balance sheet. For one thing, debt securities issued by monetary financial institutions (MFIs) grew in prominence. For another, Austrian counterparties reduced their holdings, which was offset by a rise in EU and euro area counterparties. The changes highlight the deepening interconnection of banks with debt securities markets. This is addressed by both microprudential and macroprudential supervisory measures. In addition, the greater geographical diversity of counterparties, which are mainly from the EU and the euro area, contributes to a broader distribution of risk.

Keywords: securities holdings statistics; banks securities holdings; bank securities portfolios; portfolio investment; debt securities; banking statistics; Eurosystem (search for similar items in EconPapers)
JEL-codes: G11 G15 G20 G21 G23 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.oenb.at/dam/jcr:67270daa-7094-47ad-9a1 ... ecurities-market.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbfs:y:2024:i:48:b:5

Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria

Access Statistics for this article

Financial Stability Report is currently edited by Markus Schwaiger, Birgit Niessner, Vanessa Redak and Martin Schuerz

More articles in Financial Stability Report from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Stefan W. Schmitz ().