These forced sales drove down asset prices, increased volatility, and weakened the financial positions of all holders of similar assets. Volatile asset prices and weaker borrower balance sheets in turn heightened the risks borne by repo lenders, further boosting the incentives to demand higher haircuts or withdraw funding entirely.
The behavior of stock prices also shows that investors have started to again put money in European banks. A study by advisers to the European Systemic Risk Board (ESRB) recently called the European banking system bloated and highly risky. Do you agree and is there a role to play for the ECB as the new supervisor?