ECB Warns of Political Risks to Financial Stability

November 24, 2016 Share Print 0

Political uncertainty is putting the eurozone’s financial stability at risk, according to the European Central Bank.
The Brexit referendum and the US election both ratcheted up what it calls its “composite indicator of systemic stress”.

It says the 19 countries that use the euro could be hit by trade wars, higher inflation and rising US interest rates.
In a worst-case scenario, the ECB says, this could reignite the 2009 eurozone debt crisis.

It also warned that some stock markets could be heading for sharp falls. “Valuation measures… are in some regions hovering at levels which, in the past, have been harbingers of impending large corrections.”

The bank is also worried about political uncertainty within the eurozone, with a constitutional referendum in Italy on 4 December and elections in France and Germany next year.

via BBC

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.