MNI BRIEF: Geopolitics A Test For Financial Stability -ECB

The shifting geopolitical environment could test for euro area financial stability, according to the European Central Bank’s Financial Stability Review published on Wednesday.

An unstable trading framework alongside uncertainty over areas such as defence, international cooperation and regulation, could have major economic and financial impacts, ECB Vice President Luis de Guindos said in the report.

Despite European firms and households having improved their balance sheets over recent years, trade tensions and weaker growth “imply future headwinds”, the review said. The ECB also sees it as crucial that financial institutions comply with capital buffer requirements.