European supervisory authorities publish spring 2026 report on financial risks

On March 27, 2026, the European Supervisory Authorities (EBA, EIOPA, and ESMA) released their spring update regarding risks to the EU financial system. The report highlights that geopolitical tensions, particularly the war in the Middle East, pose significant threats to global stability. Key concerns include potential energy price hikes, inflationary pressures, and weakened economic growth. The authorities reiterated warnings about risks of sudden repricing and liquidity reduction in stock and bond markets. Furthermore, the report identifies emerging risks in the private credit sector, citing a lack of transparency, limited data, and complex interconnectedness. Elevated interest rates are noted as a factor that may tighten funding conditions and impair asset quality. Tensions near the Strait of Hormuz and airspace closures are highlighted as specific geopolitical factors potentially impacting insurance companies, though sector losses may be mitigated by policy exclusions. Finally, the report warns that geopolitical events and cyberattacks could cause severe disruptions to critical financial infrastructures.