Over the last few years, signs of asset mispricing as well as lingering private and public sector debt sustainability concerns had been identified as vulnerabilities to financial stability. In addition, euro area banks’ profitability had been low, due to both structural and cyclical factors, while non-bank financial intermediaries had grown in size since the great financial crisis, taking on more credit and duration risk.
As the coronavirus shock hit the euro area, we observed flight-to-safety phenomena, a surge in volatility and a sharp tightening of financial conditions, as in previous crises. In February and early 2/4  BIS central bankers' speeches  March 2020, investment funds experienced exceptionally large outflows. Initially, high-yield corporate funds were at the epicentre of redemptions.