Mideast conflict could spark financial system stress: ECB

Frankfurt, Germany: The Middle East conflict is a threat to financial stability, a senior European Central Bank official said Thursday, warning that i...

Frankfurt, Germany: The Middle East conflict is a threat to financial stability, a senior European Central Bank official said Thursday, warning that it could spark "systemic stress" in the markets.

The turmoil unleashed by the conflict has come at a time of growing worries about a bubble in tech stocks driven by euphoria over AI, as well as the health of the private credit sector.

"This conflict could trigger the unravelling of interconnected vulnerabilities and cause systemic stress," ECB Vice President Luis de Guindos said in a speech in the Estonian capital Tallinn.

"It threatens to derail market sentiment at a time when asset valuations are high," he said, adding it could also be "amplifying stress in the non-bank financial sector".

De Guindos, whose role at the ECB includes monitoring financial stability, added however that the "spillovers to the euro area financial sector have so far remained contained".