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Global banks: safer but pockets of weakness remain

​Overall, the global financial system looks healthier than a decade ago but pockets of weakness remain. Global banks’ capital levels have improved in recent years, but leverage measures point to some vulnerability: some banks still have only $3-4 of capital for each $100 of assets. A rise in non-provisioned, non-performing loans (NPLs) since 2007/8 also means that improvements in bank capitalisation in some Eurozone economies have been more apparent than real. Furthermore, Eurozone and Australian banks still rely extensively on wholesale funding, increasing their vulnerability. Other risks in the financial sector include low bank profitability, increased maturity mismatch and the migration of risks from banks to the strongly growing shadow banking sector.

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