The European Insurance and Occupational Pensions Authority, together with the European Banking Authority and the European Securities and Markets Authority, published the Spring 2025 Joint Committee update on risks and vulnerabilities in the EU financial system, warning that geopolitical tensions and rising cyber risks are creating significant challenges for financial stability and calling for heightened vigilance by supervisors and financial institutions. The update highlights trade disputes, rapidly shifting policies, ongoing international conflicts and the prospect of economic fragmentation as factors reshaping global markets. It flags growing uncertainty for financial institutions, including exposure to international markets, liquidity risks and the evolving role of artificial intelligence (AI), and recommends proactive risk management, stronger cyber resilience and closer monitoring of global financial linkages including currency risks. Against the risk of continued market volatility, it urges preparedness for the potential materialisation of liquidity risks and adequate provisioning. On cyber and digitalisation, it points to robust data governance, critical assessment of AI solutions including compliance with the AI Act, and timely implementation of the Digital Operational Resilience Act. The Joint Committee update was presented as ESA input at the Financial Stability Table of the EU’s Economic and Financial Committee meeting on 27-28 March 2025.

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