Financial stability outlook remains fragile as macro-financial conditions weaken, ECB finds

Financial stability outlook remains fragile as macro-financial conditions weaken, ECB finds

• Financial markets remain exposed to adverse macro-financial and geopolitical developments, potentially amplified by vulnerabilities in some non-bank financial institutions
• Full impact of tighter financial conditions on real economy yet to be felt
• Higher borrowing and debt service costs will increasingly test resilience of euro area households, firms and governments
• Euro area banks see profitability benefit from rising interest rates but face headwinds from higher funding costs, worsening asset quality and lower lending volumes (...)