In the meantime, deposits with longer maturities have gradually declined. They have been subsequently placed in instruments issued by non bank financial institutions such as bonds and mutual funds. With this composition of deposit funds, the banking system as a whole faces the problem of high volatility of funds. This in turn will hinder the banking system from placing funds in long-term investment financing.
It is a sign of the responsiveness of the new European regulatory structures that these concerns have gained the full attention of the EBA, which has examined the issue in two special supervisors’ workshops and a significant report of the Banking Stakeholder Group. The influence of the debate is also evident in the EBA’s consultation papers and RTSs.