With interest rates at record lows, real estate prices have soared in several hotspots. Some policymakers have warned that loose monetary policy risked inflating asset bubbles, potentially leading to the next crisis.

“What could cause the next crisis? I don’t know, but I suspect it could be the real estate market,” LETA quoted Nouy as saying on Wednesday. “We know for sure that there will be a new crisis. But we don’t know when or why it will emerge.”

While banks are better capitalized, liquidity is ample and money is cheap, she warned that some banks have not been successful enough in mobilizing collateral and acquiring additional liquidity in the market when under pressure.

“What is still lacking is a European deposit insurance,” Nouy said.

“I know that some northern and eastern European countries want to see a more pronounced reduction of risks in euro area banks before further moves are made. I personally think that the risks have already been reduced significantly. So, we now have to move forward,” she added.

Discussing the Baltics, Nouy warned that the growth in commercial property price posed a risk, as did the use of variable interest rates since there was no guarantee wages or profits would rise in tandem with rates.

This also posed a broader risk to the Nordics since Scandinavian lenders own many of the Baltic banks, she added.