European Central Bank: Middle East conflict and US policy exacerbate financial risks.

The latest financial stability assessment report released by the European Central Bank on the 27th pointed out that the geopolitical impact of the Middle East conflict poses a serious challenge to the financial stability prospects of the Eurozone, while the frequent changes in trade policy by the United States government and its withdrawal from international cooperation mechanisms further exacerbate global financial risks. The report stated that although the Middle East conflict is the main factor influencing markets, uncertainty in trade policy still exists. In particular, the uncertainty of the U.S. government's commitment to multilateral cooperation may disrupt international order, leading to an increasing fragmentation of geopolitical economic and regulatory risks on a global scale. The report believes that high tariffs, high uncertainty in trade policy, and geopolitical tensions are interacting with pressure on energy supply and disruptions in shipping. U.S. trade policy continues to exert sustained external pressure on the Eurozone. The U.S. has generally raised import tariffs on trading partners, leading to a more persistent shift in the global trade environment. The report indicates that, under the impact of geopolitical conflict, the financial stability of the Eurozone continues to exhibit high vulnerability. The Middle East conflict has disrupted global supply of energy and other commodities, weakened economic growth prospects, raised energy prices, heightened inflation, and the impact on global economic and financial stability will worsen as the conflict continues. European Central Bank Vice President Luis de Guindos stated that the current energy supply shock will lead to a double risk of rising inflation and declining economic growth. In an environment of weak economic growth and rising financing costs, this will not only exacerbate market volatility but also pose a challenge to debt repayment capacity.