CNB: Financial sector resistant to shocks but mortgages represent risk

The Czech financial sector remains highly resistant to shocks, the Czech National Bank says in its 2015/2016 Report on Financial Stability published on Tuesday. Stress tests on Czech banks confirmed their ability to handle even a deep recession and increased losses on loans. However, the central bank says there is genuine risk surrounding mortgages, with the danger of a property price and loans spiral continuing. Meanwhile, the CNB has raised the compulsory credit reserve for all banks, savings banks and securities traders from 0.5 percent to 1.0 percent, a decision that will take effect in mid-2018.