EU Policy Watch
Reshaping European Financial Stability Under Geopolitical Shocks: Examining Energy Price Volatility to Systemic Risk
The European Central Bank's "Financial Stability Review" points out that the energy supply shock brought by the Middle East conflict is testing the financial stability of the Eurozone. Although bank capital buffers have improved, geopolitical uncertainty, the liquidity fragility of non-bank financial institutions, and structural changes brought about by AI technology constitute multiple interconnected systemic risks, requiring policymakers to remain highly vigilant.
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