Austria: Financial System Stability Assessment-Press Release; Staff Report; and Statement by the Executive Director for Austria
IMF Staff Country Reports, February 3, 2020
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- Austria: Financial System Stability Assessment-Press Release; Staff Report; and Statement by the Executive Director for Austria
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Bibliographic details
- Published: February 3, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513528786.002
Summary of assessment
- Presents Austria’s 2019 Financial System Stability Assessment.
- Austrian authorities have proactively strengthened the financial stability framework since the previous Financial Sector Assessment Program (FSAP).
- FSAP analysis suggests that banks, in aggregate, are resilient to severe macrofinancial shocks, although most banks would make use of capital conservation buffers.
- Mutual financial cooperation arrangements among banks act as a shock absorber for idiosyncratic shocks, but high financial interlinkages may fuel loss propagation in a systemic event.
- Robust regulatory framework and prudential policy actions have lowered financial stability risks, but notable challenges remain.
Risks and vulnerabilities
- High interconnectedness across financial institutions increases potential for loss propagation in systemic events.
- Exposure to cross-border risks and money-laundering risks is highlighted as a continuing vulnerability.
- Resource constraints, data and regulatory gaps constrain effective oversight and risk monitoring.
Stress testing and resilience
- Banks are generally resilient to severe macrofinancial shocks at the aggregate level.
- Most banks would rely on capital conservation buffers under severe stress scenarios.
- Recommendation to enhance the stress testing framework to consider second round effects and contagion.
Data, supervision, and regulatory gaps
- Identified gaps in data collection on:
- foreign exposures,
- nonfinancial corporates,
- real estate.
- Need to strengthen supervision of related party, group-wide, and money-laundering risks.
- Supervisors should be enabled to take timely action to correct unsustainable risk taking, including unsustainable lending and business models.
- Authorities should enhance monitoring and oversight related to contagion/spill over risks.
Policy recommendations (enumerated)
- Enhance the stress testing framework to explicitly consider:
- second round effects,
- contagion across institutions.
- Improve data collection on:
- foreign exposures,
- nonfinancial corporates,
- real estate.
- Strengthen supervision of:
- related party risks,
- group-wide risks,
- money-laundering risks.
- Ensure supervisors have capacity and tools to take timely corrective action against unsustainable lending and business models.
- Enhance monitoring and oversight related to contagion and spillover risks.
Content in this bundle
- 1autea2020001 - Executive Summary