At present, we hardly need to describe systemic risk in words: we can almost feel it. In all our economies, financial distress became so widespread that it impaired the functioning of the entire system to the point where economic growth and welfare suffered massively. This financial crisis is an overwhelming case of the materialisation of systemic risk.
Nevertheless, the overall effects of negative rates on the banking sector need to be carefully monitored, particularly because the balance of their effects will depend on how long rates remain in negative territory. Progress in tackling structural challenges has clearly been insufficient Notwithstanding the weakening economic prospects, banks’ profitability is mainly weighed down by structural factors.