MNI BRIEF: Highly Uncertain Fin Stability Threats-ECB Guindos
MNI (LONDON) - Current weak economic conditions and the uncertain geopolitical outlook is increasing financial stability risks across the euro area as underlying vulnerabilities make financial markets "prone" to future bouts of volatility, European Central Bank Vice President Luis de Guindos said Monday.
Investors may be underestimating the likelihood and potential impact of adverse scenarios for the bloc, and the concentration of equity market capitalization in the past years has increased the concerns over the possibility of an asset price bubble connected to artificial intelligence, de Guindos said, adding that sovereign and credit risk were also vulnerabilities to financial stability.
De Guindos stressed that previous regulatory changes work in favour of resilient financial institutions and that is not the time “to roll back hard- won regulatory progress”. Compared to one year ago “the balance of macro-risks has shifted from concerns about high inflation to fears over economic growth,” he added. (see MNI SOURCES: ECB Heads For 25BP Cut; Risks From Trump, Germany )