In the euro area, we see that investment funds have been taking on higher credit risk and duration risk in the current market environment. And there are strong indications that liquidity risks are building up in the sector with the share of less-liquid assets in the sector growing continuously since the global financial crisis.
Third, the overall leverage of the sector is difficult to grasp. Alternative investment funds do not face any binding restrictions on leverage. A tail of highly leveraged bond and hedge funds with leverage multipliers exceeding 30 compares to an average leverage ratio for banks of below 20 in the euro area.