Interview with Luis de Guindos, Vice-President of the ECB, conducted by Leonidas Stergiou on 21 May 2025

27 May 2025

What is the key message from the latest issue of the ECB’s Financial Stability Review?

Uncertainty in the global economy has increased significantly since the last Financial Stability Review in November 2024, mainly because of the abrupt change in US tariff policy. Given this level of uncertainty, we see three main risks to financial stability.

First, market valuations are very high and are now pricing in a benign scenario with no recession, lower inflation and lower interest rates. High valuations and high uncertainty could give rise to sharp market corrections – as we saw after the US tariff announcements on 2 April – and adjustments could become disorderly. Second, the heightened uncertainty is already affecting growth, which could elevate credit risks for banks and non-banks. The European Commission’s growth forecasts have been revised downwards for 2025 and…