Risk Survey: the threat posed by risk sources to Lithuania’s financial system is declining, however, concerns about the euro area sovereign debt problems remain high

Financial institutions are concerned about debt sustainability problems of the European states, a shock of the prices of energy resources, a potential change of a political environment in Lithuania. “Owing to the contagion effect, the problems of the euro area countries may have a negative impact on Lithuania’s economy. This is an important risk, which is difficult to safeguard against, since its management and impact reduction tools are limited in Lithuania”, Ms. Sigita Veidaitė, Economist of the Macroprudential Analysis Division, Financial Stability Department, Bank of Lithuania, commented the results of the survey.

Lithuania is dependent on the global economic processes, therefore, the economic situation in the European Union countries also affects the assessment of other risks (for example, a slow recovery of Lithuania's economy, a macroeconomic risk). A slow recovery of Lithuania’s economy or an economic downturn remain an important, but less probable, threat. The assessment of the size of the credit risk of households and enterprises declined, same as the probability that financial institutions will face funding difficulties. Financial institutions do not expect an increase in inflation or a further fall in real estate prices.

The objective of the risk survey is to identify the most important sources of threats to Lithuania’s financial system, to assess the probability of the occurrence of unfavourable events and their potential impact on the domestic financial system. Managers, risk managers or other representatives of thirty seven enterprises, who have a large experience of work in financial markets, answered the questions asked during the survey.

Comprehensive report (660.2 KB download icon) of the survey is available on the website of the Bank of Lithuania.

Financial stability