We are following these developments very closely, notably in relation to risks posed by asset valuations and the search for yield phenomenon. Our assessment at present, monitoring a range of asset markets, is that there are no signs of generalised overvaluations in the euro area.
By providing the basis for payments and by acting as the principal intermediary between savers and borrowers, the banking system plays a role similar to the electricity supply network as a vital part of the economic infrastructure. However, as recent experience has shown, if the stability of the system is undermined, considerable disruption can ensue, leading to considerable effects on social and economic costs.