According to the European Central Bank (ECB), customs disputes and dusting in international alliances could grow into the risk of financial stability in the euro area.
“The increasing trade conflicts and the associated downward risks for economic growth put a strain on the prospects for financial stability,” ECB Vice President Luis de Guindos summarizes the findings of the most recent semi-annual financial stability report of the central bank.
The risk of an economic break -in has grown, in particular the stock markets are “still susceptible to sudden and drastic corrections”, the central bank states. With his erratic customs policy, US President Donald Trump causes considerable faults.
Even billion dollar expenditure for defense is not without risk
Trade restrictions and higher customs barriers are likely to be a brake block, especially for export -oriented companies in Europe. If there are discounts, according to the ECB, the risk of banks and non -banks in the euro area may increase that borrowers cannot repay their debts.
According to the central bank, the huge billions that Europe wants to defend in its defense are also not without risk. Such investments would have the potential to ensure more economic growth. At the same time, however, higher defense spending paired with other structural challenges such as climate change, digitization and aging population could “further tighten the already tense budget situation of some governments of the euro area,” warns the ECB.