The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published a draft report on safeguarding and promoting financial stability amid economic uncertainties. The draft report emphasises the importance of financial stability as a cornerstone of the EU's economic resilience, particularly in the face of geopolitical uncertainty, heightened market volatility and structural changes. It calls for a well-integrated Capital Markets Union (CMU) to enhance investment flows and economic resilience while balancing these benefits with adequate safeguards to mitigate potential risks. There are several macro-financial risks identified, including rising sovereign debt levels, exposure to external shocks and vulnerabilities in the non-bank financial intermediation (NBFI) sector. To address these concerns, it stresses the need for robust crisis preparedness mechanisms, enhanced financial supervision, effective coordination between macro-prudential supervisors, access to granular data and an ability to respond quickly to emerging risks. It also advocates stronger cooperation with international financial bodies to manage cross-border risks and ensure a coordinated response to financial instability.
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