26 November 2025

• Stretched valuations in increasingly concentrated asset markets raise risk of sharp price adjustments
• Fiscal challenges in some advanced economies could test investor confidence
• Exposures to tariff-sensitive firms and stronger funding ties with non-banks could strain euro area banks during periods of economic or market stress
• Euro area banking sector is resilient, with strong profitability and ample capital and liquidity buffers

Remaining uncertainties around trade agreements and the longer-term economic and financial effects of tariffs continue to shape the euro area financial stability landscape, according to the November 2025 Financial Stability Review published today by the European Central Bank (ECB).

“Measures of trade policy uncertainty have eased notably from their April highs, but uncertainty continues to linger, with potential for renewed spikes,” said ECB Vice-President Luis de Guindos.

Since April, global stock markets have reached new all-time highs…