The European Central Bank (ECB) has published the results of its 2026 thematic reverse stress test on geopolitical risk. 110 banks directly supervised by the ECB from the euro area took part in the exercise. The aim of the stress test was to assess the institutions’ ability to identify severe geopolitical risk scenarios, and to analyse their impact on their capital position, liquidity and business model.<\/p>
The results show that the banks were generally able to produce meaningful scenarios taking into account their individual risk profiles. However, the ECB also identified room for improvement in individual stress test frameworks, in particular regarding risk assessments taking into account reciprocal effects between solvency and liquidity, as well as evaluating potential mitigating actions in crisis situations.<\/p>
Geopolitical risks form one of the ECB’s key priorities for supervision for the period from 2026 to 2028. The results of the stress test feed into the ongoing supervisory dialogue with the banks.<\/p>