European bank supervisors step up checks on government-bond risks

European banking supervisors are carrying out extra checks on the risks in banks’ government-bond portfolios, according to François-Louis Michaud, chair of the European Banking Authority (EBA). Dutch news agency ANP reported that Michaud made the comments in an interview with Bloomberg at the EBA’s headquarters in Paris. [1]

ANP said yields on some European government bonds were rising to their highest levels in years. Michaud said banks’ holdings of government debt therefore needed closer attention. The report did not specify when the checks began, how they are being conducted or which banks are involved.

Michaud said banks’ exposure to potential problems appeared limited so far, and that he had not seen banks suffer from the developments to date. Higher interest income was limiting the effect on their capital, he said. Michaud also said the risks to banks from a hypothetical crash linked to artificial intelligence appeared limited, but that the EBA was paying considerable attention to that possibility. [1]