Overview
- Equity markets face elevated correction risk due to stretched valuations and increasing concentration, with US tech and AI names cited as potential flashpoints.
- Luis de Guindos warns that uncertainty persists with scope for renewed spikes, summarizing the ECB’s semiannual financial stability assessment.
- Banks with sizable dollar operations are urged to hold larger liquidity and capital buffers to withstand potential US‑currency shortages, volatility and counterparty credit risks.
- The ECB highlights concentration of dollar business at major institutions, naming Deutsche Bank, BNP Paribas, Crédit Agricole, Groupe BPCE, Société Générale, ING and Banco Santander.
- The report notes solid profits and strong reserves across big euro‑area banks, while pointing to trade and geopolitical shocks—including April’s US tariff package—and to risks for borrowers exposed to tariffs.