Across European countries, the correlation between bank-level measures of credit risk and growth indicators has been relatively low, suggesting that macroeconomic risks might be underpriced. [11] Russia’s invasion of Ukraine marked a turning point in terms of geopolitical risks and security policy. So far, there have been no severe functional disruptions in the financial system.
While supervisors can prod BIS Review 105/1997  -4developments in risk management, ultimately it will be up to the industry to find other ways to better measure and manage credit risk. Strengthening Market Discipline Harnessing market forces to reinforce supervisory objectives is another important goal in the changing culture of supervisors.