The euro zone’s central bank has warned that Europe’s insurance companies and pension funds are at risk of a market crisis similar to the mini-budget collapse in Britain.
In a sign of growing concerns about the shadow banking sector, the European Central Bank yesterday urged insurance companies and pension funds to boost their reserves to ensure they can withstand the impact of the bond market sell-off.
She said recent market turmoil, including the turmoil that engulfed British government bonds following then-Prime Minister Liz Truss’ ill-fated micro-budget a year ago, showed how the “liquidity pressures” faced by insurers and pension funds (ICPFs) “can spread stress across… The broader financial system.”
British pension funds faced a crisis last fall when Truss’s short-term financial plans raised concerns in bond markets