I therefore feel that although volatility may continue the prices of commodities have already experienced most of their adjustment to the new international economic scenario. This implies a more hostile international environment for emerging economies, where recession risk is on the up-side.
These developments trigger several questions: First, what are the channels through which a low interest rate environment can affect the financial system’s exposure to risk? Second, how sensitive are the balance sheets of euro area financial institutions to duration risk? Third, how should regulatory and macroprudential policies be designed to avoid the negative implication of rising interest rates?