September 21, 2021

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European watchdog ESMA warns of 'significant risks' of market collapse |  Financial issues

European watchdog ESMA warns of ‘significant risks’ of market collapse | Financial issues

In recent years, extremely high corporate and government debt, overvalued investments including stocks and increased flight into risky investments such as highly volatile cryptocurrencies can lead to a sharp decline in financial markets, according to the European Securities and Markets Authority (ESMA) Wednesday. after investigation.

The ten-year-old body in Paris has been worried about financial markets for some time, but is now exacerbating those concerns. I have investigated a series of weaknesses. One reason for the last warning is, for example, the massive price movement in GameStop stock. The share price of the company in which many people invested, rose and fell in a short time by tens of percent.

In addition, the market’s reaction to the loss of billions in investments in US hedge fund Archegos and British financial services provider Greensill is showing clear signs of increasing uncertainty, according to ESMA.

More risks

Also, more risk taking by private investors, for example, mobile investment apps like Robinhood, which allow people to put their money into financial products at no additional cost while encouraging purchases on social media, matches this sense of increased risk. from shrinkage, according to ESMA.

Dutchman Stephen Major, Director of the Financial Supervisory Authority ESMA, warns of the dangers of a stock market crash.

Dutchman Stephen Major, Director of the Financial Supervisory Authority ESMA, warns of the dangers of a stock market crash.

“We expect an extended period of risk for institutional and private investors in the event of further potentially significant market corrections,” writes ESMA, which was established in response to the 2008 credit crunch.

Major, which has been in operation since its inception in 2011, also points out the dire consequences of continued massive government and monetary support. Since central banks remain very active and large-scale in the market buying hundreds of billions of bonds, the chance of making profits for banks and insurance companies is limited.

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