This article is composed of excerpts from the 2017 annual report of the National Bank of Belgium (“Report 2017 - Economic and financial developments, NBB, March 2018), the FSAP results and recommendations published by the IMF on 8 March 2018 (“Belgium : Financial System Stability Assessment”, IMF, March 2018) and the press release issued by the NBB at the time (IMF stress tests confirm that Belgian banks and insurance companies are able to withstand severe shocks, NBB, 8 March 2018).
Real estate is a key economic sector for financial and macroeconomic stability. The sector is prone to boom/bust cycles and has been a common cause of banking crises in the past. Macroprudential authorities should therefore closely monitor developments in this crucial sector and stand ready to take policy action in case adverse developments pose a threat to financial stability. Over recent years, many EU countries have actively used macroprudential instruments to address vulnerabilities in the real estate sector. This article reviews the work of the European Systemic Risk Board (ESRB) concerning the residential and commercial real estate sectors and financial stability in the EU, covering both the ESRB’s analytical work and policy work.