European Central Bank's Financial Stability Review warns: Middle East war threatens eurozone financial stability
The European Central Bank warned in its latest Financial Stability Review that the Middle East conflict has caused major disruption to global energy supplies, raising downside risks to inflation and growth. Although financial markets have adjusted in an orderly manner, asset prices remain fragile. Insufficient liquidity in non-bank financial institutions, concerns over sovereign debt sustainability, and hybrid threats such as cyberattacks could amplify shocks. The banking system remains relatively sound, but attention needs to be paid to exposures to energy-intensive industries and households' debt-servicing capacity. The review also includes four thematic studies.