The European central Bank (ECB) has warned that the rapid growth of eurozone investment funds in recent years means that they increasing represent a threat to financial stability in the region.

The ECB stated in its Financial Stability Review this morning that their “more important role… needs to be met with a commensurate increase in monitoring”.

In particular, it singled out exposure to liquidity mismatches, or the gap between investors being able to quickly exit funds and the ability of those funds to dispose of assets.

“This characteristic increases the potential for the investment fund sector to amplify market-wide shocks due to its high interconnectedness with credit institutions,” it added in the statement.

The investment fund sector was one of its four main threats to financial stability for the next two years.

While the euro area financial system had shown resilience over the turbulent last six months and systemic stress remains low, according to the ECB review, the risk of asset market corrections has intensified.