The European Central Bank (ECB) has published in May 2023 its biannual edition of the Financial Stability Review.

The outlook for euro area financial stability remains fragile amid weak macro-financial conditions and unexpected stress in the banking sectors of some mature economies.

Overall, the financial stability vulnerabilities remain elevated, with special emphasis in the following key messages:

• Financial markets remain vulnerable to less favourable growth and inflation outcomes. Adverse market dynamics could be amplified by forced sales of securities by non-banks amid low liquidity buffers.
• Tighter financial and credit conditions are testing the resilience of euro area firms, households and sovereigns. The correction in property markets could turn disorderly in the event of negative macro-financial surprises.
• Euro area banks have had little exposure to the recent unexpected banking sector stress experienced in some mature economies, but funding and asset quality headwinds may weigh on future profitability.

ECB, May 2023 - Read the Full Report, Read the Key Messages or Read the Press Release.

See also:

• Find Out More About Liquidity and Financial Stability