MNI BRIEF: Sovereign Fiscal Space A Stability Risk - ECB

The combination of a small fiscal space for Eurozone countries and the change of the profile of bond investors to incude more active investors holding shorter-duration bonds poses a risk for financial stability, European Central Bank Vice President Luis de Guindos said Wednesday.

Presenting the ECB's latest Financial Stability Report, de Guindos said that political instability, combined with higher issuances due to challenges of higher defence spending and the green transition, could expose countries to sudden changes of market sentiment, especially with growth rates below the European average.

However, de Guindos denied the existence of a bubble in sovereign debt and refused to weigh the incoming risks from both countries' individual situations and the change of the bond investor profile.