ECB Issues Caution on Bank Lending Practices Amid Risk Swap Concerns

The European Central Bank (ECB) has raised alarms regarding the increasing trend of bank lending involving risk swaps, cautioning that such practices could obscure significant vulnerabilities within the financial system. In a recent report, the ECB indicated that while risk swaps are utilized to manage risk, their widespread adoption may inadvertently introduce systemic risks that could jeopardize financial stability.

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