(Bloomberg) — The European Central Bank warned that escalating global tariff tensions have emerged as a “significant concern” for financial stability and the global economy.
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“Policy authorities need to identify the risks stemming from trade tensions, monitor them and evaluate their potential impact on financial stability,” six staff economists wrote in a note published on Tuesday that will feature in a bigger risk report scheduled for Wednesday.
US President Donald Trump’s trade war has unnerved markets, with investors rushing out of the US dollar so far this year — it has fallen against every other major currency tracked by Bloomberg.
The ECB recommended that “financial institutions should also take a number of proactive steps to cope with risks stemming from trade tensions.”
The report — prepared by economists Pauline Avril, Paul Bochmann, Stephan Fahr, Aoife Horan, Cosimo Pancaro and Riccardo Pizzeghello — echoes comments from ECB Vice President Luis de Guindos, who last week cautioned that the recent turmoil on tariffs could upend the region’s financial system.
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