27 May 2026

• Middle East war unleashes major supply shock, with highly uncertain outcomes
• Prolonged geopolitical stress and lingering fiscal challenges could test financial market sentiment
• Vulnerabilities among non-banks, including those active in private markets, could amplify stress in financial markets
• Exposures to non-banks and trade- and energy-sensitive firms constitute sources of credit, liquidity and funding risks for euro area banks

The outlook for euro area financial stability is being shaped by geoeconomic stress and energy supply disruptions, with the severity and duration of the fallout still uncertain, according to the May 2026 Financial Stability Review, which is published today by the European Central Bank (ECB).