De Guindos warns of global uncertainty and euro area financial stability risks
ECB Vice-President Luis de Guindos stated on January 14, 2026, that the euro area faces elevated financial stability risks amid profound global uncertainty and geopolitical shifts. He highlighted vulnerabilities in non-bank financial intermediaries and concentrated asset markets.
Global shifts weigh on euro area outlook
The global economy is undergoing profound transformation and heightened uncertainty, driven by significant US policy changes and geopolitical risks.
These developments delay firms' investment decisions and affect euro area exports, while prompting households to increase precautionary savings.
Despite this, euro area economic activity showed resilience, growing 0.3 percent in Q3 2025, primarily in services, supported by a robust labor market.
Inflation stood at 2.0 percent in December, with core inflation slightly lower, and is projected to stabilize at the 2 percent target in the medium term.
Economic growth forecasts have been revised up to over 1 percent this year, with domestic demand, business investment, and government spending expected to be the main drivers.
Triple threat to financial stability
High global uncertainty is not reflected in current market pricing, raising the potential for abrupt shifts in sentiment.
This forms a common trigger for three main financial stability risks.
Stretched valuations in concentrated asset markets pose a risk of sharp price adjustments, particularly for non-banks with liquidity and leverage vulnerabilities.
Growing interlinkages between banks and the non-bank financial sector could expose funding vulnerabilities.
Furthermore, fiscal challenges in some advanced economies, marked by high deficits and public debts, could test investor confidence and trigger stress in sovereign bond markets.
Addressing these structural challenges, including defence spending and climate change, necessitates robust fiscal consolidation.
Long-term solutions for immediate threats
De Guindos' speech effectively outlines the complex interplay of global uncertainty and structural vulnerabilities facing the euro area.
While the call for deeper European integration is strategically sound, it offers little immediate comfort against the identified risks of market complacency and fiscal strains.
The emphasis on fiscal consolidation is crucial, yet the underlying challenges of defence spending and demographics demand more concrete policy responses.