Belgium: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis and Stress Testing

Belgium: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis and Stress Testing
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Volume/Issue: Volume 2023 Issue 393
Publication date: December 2023
ISBN: 9798400262456
$20.00
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Summary

The financial sector has remained resilient to a series of shocks and is well capitalized and profitable, but risks remain. Bank profitability and capital have surpassed pre-pandemic levels. Liquidity buffers remain strong and banks’ direct exposures to Russia are limited. The insurance and investment funds sectors have also weathered the pandemic well. There is limited evidence of credit or asset price booms over the past decade. However, inflationary pressures, partly the result of spillovers from Russia’s war on Ukraine, and a rapid tightening of financial conditions have weakened activity and reined in credit demand. Among high uncertainty, GDP growth is projected to slow in 2023, before returning to potential over the medium-term.