The European Securities and Markets Authority, alongside the European Banking Authority and the European Insurance and Occupational Pensions Authority, issued its Autumn 2025 Joint Committee Report on risks and vulnerabilities in the EU financial system, highlighting heightened geopolitical uncertainty linked to global trade tensions and shifts in the global security architecture. The authorities call for increased vigilance and urge financial entities to maintain adequate provisions amid a more volatile and unpredictable environment. The report notes that sudden structural changes in global trade and security have worsened the economic outlook in the first half of 2025, and that despite the initial moderate impact of the US–EU preliminary trade agreement, risks to financial stability and the potential for further market corrections remain. While the European financial system is described as resilient, with banks generating solid profits, insurers holding strong solvency positions, pension funds remaining well-funded, and market infrastructures and money market funds proving robust, the ESAs warn that growing transatlantic tensions are creating new risk transmission channels through tariffs and currency shifts affecting commodities and foreign exchange markets, amplified by strong interlinkages with US financial markets. Against this backdrop, they recommend embedding geopolitical risks into day-to-day operations and risk assessments (including dependencies on non-EU markets and service providers), maintaining provisions and stress testing liquidity for potential market corrections, strengthening cyber-risk vigilance including via third-party providers, monitoring contagion risks from expanding crypto-asset markets, and supporting the Savings and Investments Union initiative while considering liquidity, risk profiles, and retail suitability of alternative investments.

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