Khaberni -The European Central Bank announced on Tuesday that it will focus on banks' resilience to geopolitical risks next year in its stress tests, after threats by US President Donald Trump to impose tariffs caused a stir in global markets.
Claudia Buch, the bank's supervisory chief, told a committee in the European Parliament that Eurozone banks need to "strengthen their ability to withstand immediate macro-financial threats and severe geopolitical shocks."
She added that these risks "are not new" and had been addressed through the bank’s established supervisory efforts.
According to the "France Press" agency, this year’s stress test by the European Central Bank assessed banks' resilience against usual scenarios, including the escalation of geopolitical tensions and rising tariffs.
However, Buch said that next year's test will go further by requiring financial institutions to assess "geopolitical risk scenarios specific to businesses that could severely impact their financial solvency."
She explained that Trump's recent announcements regarding tariffs showed "how quickly increasing geopolitical risks can change the environment in which banks operate."
Since his return to office in January, Trump has threatened to impose comprehensive tariffs on imports, including those from the European Union.
In particular, his announcement of increased duties in early April caused tensions in the markets, despite being suspended for a period.
Buch stated that Trump's initial announcements led to "greater volatility" but were "short-lived," while the long-term effects "will only appear over time."
She added that imposing higher customs tariffs could affect the growth and financial stability of companies, and banks might then be required to enhance their risk reserves.
The European Central Bank regularly conducts stress tests to assess the resilience of Eurozone banks in the face of various economic and financial shocks, in addition to cyberattacks and climate-related events.
These tests aim to ensure that banks have sufficient capital to absorb losses in crises, helping to improve the resilience of the European banking system.
