MNI: EZ Banks Resilient, Multiple Risks Linger- ECB

Banks across the eurozone remain resilient, with strong profitability and ample capital and liquidity buffers, but remaining uncertainties around trade agreements and the longer-term economic and financial effects of tariffs "continue to shape the financial stability landscape," according to the European Central Bank's November Financial Stability Review published on Wednesday.

“Measures of trade policy uncertainty have eased notably from their April highs, but uncertainty continues to linger, with potential for renewed spikes,” ECB Vice-President Luis de Guindos said in the introduction.

Market concerns about stretched public finances in some advanced economies may create strains in global bond markets which could affect euro area financial stability through shifts in international capital flows and currency swings, the FSR adds.

Global stock markets have reached new all-time highs since the spring sell-off and credit spreads are currently tight by historical standards. However, financial markets − and most notably equity markets -- remain vulnerable to sharp adjustments due to persistently high valuations, with sentiment susceptible to a shift in sentiment on deteriorating growth prospects or disappointing news on artificial intelligence (AI) adoption, it noted.