Jean-Claude Trichet: Slovenia’s adaption of the euro Keynote address by Mr Jean-Claude Trichet, President of the European Central Bank, at the € conference Slovenia", organised by the Bank of Slovenia and the European Central Bank, Ljubljana, 15 January 2007.
Low interest rates pose risks to financial stability as they squeeze banks’ and insurers’ earnings. Institutions could then assume greater risks without having sufficient capital buffers to be able to cushion the impact of these risks. 2. Dangers are also associated with an abrupt sharp hike in interest rates. Banks that, for instance, had granted long-term, low-yielding loans would then have higher funding costs.