The risks of a foreign country defaulting on its loans and an economic downturn are the two greatest risks to financial institutions, according to a biannual survey.
The Bank of England's 'Systemic Risk Survey' found that these seven risks were the most commonly cited by respondents from 73 institutions including banks, building societies and insurers:
- 'Sovereign risk' (foreign country defaulting) cited by 79% of respondents
- Economic downturn - 79%
- Funding risk - 45%
- Risks around regulation/taxes - 40%
- Risk of financial institution failure/distress - 25%
- Financial market disruption/dislocation - 21%
- Property price falls - 21%
The Euro zone is waiting to see whether Germany will open its cheque book again for Spain, and if it does, whether this will actually help.
Distress calls went out from the Spanish Government about the future of the Eurozone - after Spain's borrowing rates hit an alarming 7%.
The cost for the Spanish government to borrow has hit 7 percent today - the level at which Portugal and Ireland asked for a bailout.