The European Systemic Risk Board published the outcomes of its 61st General Board meeting, concluding that systemic risks in the EU remain elevated and have increased since its November meeting due to the escalation of the conflict in the Middle East. While the EU economy and financial system have shown broad resilience so far, the General Board stressed the need to preserve the current level of resilience across the EU financial system. The assessment highlighted sharp increases and volatility in oil and gas prices, repricing in major bond markets partly reflecting higher short-term inflation expectations, and declines in key equity indices after earlier record highs, alongside elevated cyberattack risk to critical infrastructure. It warned that a prolonged period of heightened conflict could trigger sharp and disorderly asset price corrections and tighter financing conditions, with persistent fragilities in parts of the investment fund sector potentially amplifying stress through forced sales, liquidity strains and procyclical behaviour; concerns were also raised about opacity in private markets, leverage and liquidity mismatches. On the economic side, sustained high energy prices and uncertainty could strain household and corporate balance sheets, particularly in energy-intensive sectors, raising medium-term credit risk and potentially exacerbating sovereign risks amid higher borrowing costs and weaker activity. In the same meeting, members exchanged views on the strategic priorities guiding the ESRB’s response to the European Commission’s consultation on banking competitiveness. The ESRB also released the 55th issue of its risk dashboard and reappointed Professor Richard Portes to the Advisory Scientific Committee for a four-year term until March 2030.
European Systemic Risk Board 2026-03-31
European Systemic Risk Board warns EU financial stability risks have increased amid the escalation of the Middle East conflict
The European Systemic Risk Board said systemic risks in the EU remain elevated and have risen since November, driven by the escalating Middle East conflict, energy price volatility, bond market repricing, equity declines and high cyber risk. It warned that prolonged conflict could trigger disorderly asset price corrections, tighter financing, and higher credit and sovereign risks, with vulnerabilities in some investment funds and private markets amplifying stress. The General Board also set priorities for its response to the European Commission’s consultation on banking competitiveness, published the 55th risk dashboard and reappointed Professor Richard Portes to the Advisory Scientific Committee until March 2030.