European Central Bank warns euro area banks need to be prepared for geopolitical risks and financial instability

Eurozone banks must be prepared for geopolitical shocks and liquidity risks, warned Claudia Buch, head of banking supervision at the ECB. Political changes in the US and the war in Ukraine are creating uncertainties that may affect financial stability. Buch stressed the importance of sufficient capital and risk management systems. The ECB is closely monitoring liquidity and cyber risks, recommending the adoption of a common framework for bank crisis management.