ECB Vice President Luis de Guindos said in a speech, “for the euro area, the financial stability impact of the war has so far been relatively contained.” And, “markets have generally been functioning well”, with “no dash for cash”.

“While both banks and non-banks have been affected – especially the few that have large direct exposures to Russia and Ukraine – the economic fallout has not had a sizeable impact on the EU banking or financial systems as a whole,” he added.

But he also noted, “the invasion of Ukraine also demonstrated how vulnerable Europe is due to its high dependency on fossil fuel imports from Russia. Speeding up the green transition is a key priority from this perspective too – not only to address the urgent environmental and climate challenges we face, but also to help increase our energy security and protect the EU economy from energy price spikes.”

Full speech here.

ECB Vice President Luis de Guindos said he didn’t foresee Eurozone entering into recession. However, low growth could extend for a longer time. Meanwhile, latest news regarding US-China trade negotiations were positive. De Guindos also warned that low profitability of banks would lead to low valuation, “making the inevitable consolidation of the sector very difficult.” Low profitability of Eurozone banks was also related to costly structures and excess capacity.

Separately over the weekend, ECB policymaker Robert Holzmann complained that the current ECB monetary policy is “wrong” and “a different policy is needed in the future”. He added that ECB should think about lowering inflation target, temporarily, from 2% to 1.5%. Also, “I am convinced that she has heard the dissenting voices, that she will take them seriously and will try to find a new approach here.”