ECB Vice President Highlights Resilience and Risks

European Central Bank Vice President Luis de Guindos affirmed the Eurozone's financial stability has withstood recent market turbulence and uncertainty. However, he cautioned against potential future risks that could challenge this stability.

Trade Uncertainty and Market Vulnerabilities

De Guindos pointed to the Trump administration's trade policies as a significant source of uncertainty, potentially leading to increased exchange rate volatility. This, he warned, could adversely affect portfolio investment decisions and capital flows, with equity markets being particularly vulnerable due to their strong geographical and sectoral concentrations.

Corporate and Household Financial Risks

The Vice President also highlighted how trade tensions might exacerbate corporate credit risk and impact employment and consumption, thereby endangering household finances. Additionally, he noted that higher spending on defense and infrastructure in the euro area could lead to increased public debt.