ECB warns of tariff uncertainties as growing risks to eurozone financial stability

FRANKFURT, Nov. 26 (Xinhua) -- The European Central Bank (ECB) warned Wednesday that tariff uncertainties, along with other mounting challenges, are set to further heighten financial stability vulnerabilities in the euro area.

In its November 2025 Financial Stability Review, the bank said uncertainties around trade agreements and tariffs will "continue to shape the euro area financial stability landscape."

ECB Vice President Luis de Guindos noted that tariff-related risks, which had eased notably since April, could renew and intensify.

Among the risks, the central bank identified "sharp price adjustments" in asset markets and potential loss of investor confidence amid fiscal challenges in some advanced economies.

Equity markets, it said, are particularly vulnerable to sharp adjustments, as the bullish trend since April has pushed valuations high.

Even so, the ECB said the banking sector across the euro area remains in a good position, supported by solid profitability, ample capital, and liquidity buffers.

To strengthen the resilience of the financial system, the ECB suggested that existing capital buffer requirements and sound lending standards should remain intact.