Global Systemic Risk Near Record Highs Prompts ESRB Warning

We have been pointing to the incessant rise in the risk of the Financial Stability Board's most systemically important entities for weeks now. It appears the European Systemic Risk Board has, according to Dow Jones, issued its first warning to governments, urging them to prepare capital injections for some European banks.

The ESRB urged governments to prepare capital injections for banks which failed or came close to failing the bank stress tests earlier this year. Europe remains, marginally, the weakest region from the perspective of financial risk but we note how the Asian region was initially unharmed but as 2011 has developed, risk has spread contagiously into that region's financial system also.


And while many would argue that CDS are more 'hysterical', we point to the increasing separation between the 'haves' and 'have-nots' in Europe, as EUR Libor components continue to disperse.

It seems the market is 'sorting' the French and Swiss bank funding issues out itself...