ECB Vice President Guindos: Financial stability risks remain high

European Central Bank Vice President Luis de Guindos stated that financial stability risks remain high due to uncertain global economic and trade prospects. "Given the uncertainty of geopolitical economic trends and the ultimate impact of tariffs in a turbulent international environment, vulnerabilities remain high," Guindos said in a speech in Frankfurt on Monday. He cited "high valuations and concentration in financial markets, credit risk exposure of tariff-sensitive companies, and sovereign risk in some major advanced economies." In this context, Guindos stressed the importance of maintaining resilience in the banking system and the broader financial system, and urged for "strengthening monitoring and reinforcing the macroprudential supervision framework for the non-bank sector." The European Central Bank will release its semi-annual financial stability assessment report next week. The report will assess the increasing risks faced by the European banking system, a key source of financing for European companies. So far, the European economy has unexpectedly performed well in addressing the threats mentioned by Guindos, and the European Central Bank currently has no inclination to further lower interest rates.