ECB: More severe downturn may put public debt on unsustainable path

The coronavirus pandemic has greatly amplified the existing vulnerabilities of the financial sector, corporates and sovereigns, the European Central Bank (ECB) said in its biannual financial stability report.

Additional takeaways

"Commercial banks to face significant losses and further pressure on already low profitability."

"Sovereign spreads may rise further, impacting banks, corporates."

"More severe downturn may put public debt on an unsustainable path."

"Debt sustainability concerns could further raise the market assessment of redenomination risk."

Market reaction

The EUR/USD pair largely ignored this report and was last seen gaining 0.72% on a daily basis at 1.0977.