The European Central Bank has identified elevated valuations of artificial-intelligence stocks, stress in bond markets and potential losses at non-bank financial institutions as key risks to financial stability.
ECB Vice-President Boris Vujčić highlighted the concerns on Monday, November 2. The central bank is due to publish its next semi-annual Financial Stability Review on November 18.
High expectations for AI-related companies leave their share prices vulnerable if earnings or investment returns disappoint. Pressure in bond markets could also affect financing costs and investor appetite for risk, while losses among funds and other institutions outside traditional banking could amplify market movements.
In a separate speech in Dublin, Vujčić said geopolitical shocks could put pressure on bond and equity prices, while outflows from investment funds could intensify market moves. He also warned that fragmented European capital markets limit the bloc’s ability to share risks and absorb economic shocks.
The upcoming review is expected to provide a broader assessment of vulnerabilities across the financial system.
