Funds investing in commercial real estate pose a threat to the stability of the global economy. In this respect declaration analysts at the European Central Bank (ECB).
In the last ten years, the net asset value of real estate mutual funds has more than tripled to reach 1.1 billion Euros. Such investors will not be able to withdraw money in a short time as their assets are illiquid. . This could trigger the collapse of a number of financial institutions, such as Silicon Valley Bank, Silvergate Bank and Signature.
The publication pointed out that the growing relationship of mutual funds with the markets could undermine the stability of the entire financial system in the world if it collapses.
According to ECB analysts, the commercial real estate market has suffered as many employees “turn away” during the coronavirus pandemic. Now, however, rising interest rates and general uncertainty in the economy increase potential risks to the industry.
18 March ECB Governing Council member Pierre Wunsch, in an interview with the Belgian newspaper L’Echo declarationThe sharp decline in the value of the shares of Credit Suisse, Switzerland’s second largest bank, will not lead to a new banking crisis in the European financial market. There is currently no “contagion risk” for other credit institutions in the region.