ECB Warns Eurozone Banks to Brace for Geopolitical Shocks
FRANKFURT, March 27 (Reuters) – Eurozone banks are resilient but need to be prepared to handle geopolitical shocks and macro-financial threats, European Central Bank (ECB) supervisory chief Claudia Buch said on Thursday.
Policy reversals in some key areas by U.S. President Donald Trump’s administration have been unnerving financial markets in recent months, and policymakers are now assessing how this could affect growth, stability, and financial risk.
Key Challenges Highlighted by the ECB
- Potential deterioration in asset quality due to geopolitical conflicts.
- Economic disruptions caused by financial sanctions.
- Cybersecurity threats and weaknesses in resilience and risk management.
Buch emphasized the need for sufficient capital, robust governance, and risk management systems in banks to address these challenges. She also called on lawmakers to approve a crisis management and deposit insurance framework to better deal with bank failures and protect depositors.
Global Context
This warning comes amidst financial and political stress created by Russia’s war in Ukraine and the Western sanctions that followed. The ECB’s annual report on supervisory activities underscores the importance of proactive measures to safeguard the financial sector.
Source: Reuters