The European Systemic Risk Board published the outcomes of its 60th General Board meeting, concluding that financial stability risks in the EU remain elevated as vulnerabilities in financial markets build. The meeting also approved the publication of two reports jointly prepared with the European Central Bank and released the 54th issue of the ESRB risk dashboard. Stretched valuations in several riskier asset classes, with high concentration in segments such as the US technology sector, were highlighted alongside risk appetite that appears misaligned with a subdued growth outlook. Vulnerabilities in parts of the non-bank financial sector, including opacity, leverage and liquidity mismatches in private markets and hedge funds, were flagged as potential amplifiers of stress through forced asset sales, with global interconnectedness raising spillover risks; recent crypto market developments were cited as reinforcing concerns around valuations and governance. While recent EU-wide stress tests and the 2025 Supervisory Review and Evaluation Process point to strong capital and liquidity buffers in banking, signs of credit risk were noted in some jurisdictions and the impact of tariffs may take time to flow through to bank balance sheets; insurers were described as sound, but the Board raised concerns that recent Solvency II changes have resulted in less prudent requirements. The two ECB-joint reports will cover the financial stability implications of bank linkages with non-bank financial intermediaries and the link between geopolitical and geoeconomic risks and financial stability, including tools for regular monitoring, and are to be published in due course. The Board also pointed to implementation of the Insurance Recovery and Resolution Directive in 2027 as a key step for having resolution frameworks in place across most major sectors.
European Systemic Risk Board 2025-11-27
European Systemic Risk Board warns EU systemic risks remain elevated and approves reports on bank–non-bank linkages and geopolitical risks
The European Systemic Risk Board said EU financial stability risks remain elevated amid stretched valuations in riskier assets and vulnerabilities in parts of the non-bank financial sector, including opacity, leverage and liquidity mismatches. It cited strong bank capital and liquidity buffers but emerging credit risk in some jurisdictions, concerns over less prudent Solvency II requirements, and spillover risks from global interconnectedness and recent crypto developments. It also flagged the 2027 implementation of the Insurance Recovery and Resolution Directive.