On safeguarding and promoting financial stability amid economic uncertainties

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on safeguarding and promoting financial stability amid economic uncertainties

(2025/2051(INI))

– having regard to the Commission report of 24 January 2024 on the macroprudential review for credit institutions, the systemic risks relating to Non-Bank Financial Intermediaries (NBFIs) and their interconnectedness with credit institutions, under Article 513 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (COM(2024)0021),

– having regard to the European Central Bank (ECB) Financial Stability Review of November 2024,

– having regard to the Quarterly Review of the Bank for International Settlements of March 2025 on international banking and financial market developments,

– having regard to the letter of the Chair of the Financial Stability Board (FSB) to G20 Finance Ministers and Central Bank Governors of 21 February 2025,

– having regard to the the FSB status report of 22 October 2024 entitled ‘G20 Crypto-asset Policy Implementation Roadmap’,

– having regard to the FSB report of October 2021 entitled ‘Policy proposals to enhance money market fund resilience: Final report’,

– having regard to the response of the European Systemic Risk Board (ESRB) of November 2024 to the Commission’s consultation assessing the adequacy of macroprudential policies for non-bank financial intermediation, entitled ‘A system-wide approach to macroprudential policy’,

– having regard to the ESRB’s compliance report of February 2025 on the ESRB recommendation of 2 December 2021 on reform of money market funds (ESRB/2021/9),

– having regard to the update of the Joint Committee of European Supervisory Authorities of 31 March 2025 on risks and vulnerabilities in the EU financial system – spring 2025,

– having regard to the opinion of the European Securities and Markets Authority (ESMA) of 14 February 2022 on the review of the Money Market Fund Regulation,

– having regard to the Global Financial Stability Report of the International Monetary Fund (IMF) of 22 April 2025,

– having regard to the report by Mario Draghi of 9 September 2024 entitled ‘The future of European competitiveness’ (Draghi report),

– having regard to the report by Enrico Letta of 17 April 2024 entitled ‘Much more than a market’ (Letta report),

– having regard to its resolution of 6 July 2011 on the financial, economic and social crisis: recommendations concerning the measures and initiatives to be taken,

– having regard to the report of its Committee on Economic and Monetary Affairs of 26 March 2025 on Banking Union – annual report 2024,

– having regard to the hearing by its Committee on Economic and Monetary Affairs of 19 March 2025 on assessing the adequacy of the macroprudential framework for non-bank financial institutions in the EU,

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs (A10-0000/2025),

A. whereas financial stability remains a cornerstone of economic resilience, requiring vigilance in the face of large economic uncertainties, external shocks and systemic risks;

B. whereas the global financial crisis has demonstrated the risks to advanced economies of financial instabilities that assume global proportions;

C. whereas Russia’s continued aggression against Ukraine and the economic consequences thereof have led to inflationary pressures, volatility in energy markets and financial uncertainty;

D. whereas the imposition of tariffs contributes to the fragmentation of global trade, exacerbating supply chain disruptions and posing additional risks to financial markets and the broader economy;

E. whereas a well-integrated capital markets union (CMU) is essential for absorbing shocks and fostering investment within the EU;

F. whereas the stability of NBFIs will be even more important if the European Union shifts more of its financing to capital markets;

G. whereas NBFIs include very diverse sectors;

H. whereas lagging productivity growth has adverse effects on leveraged entities;

I. whereas high asset valuations in equity and corporate debt markets raise concerns about market correction with systemic consequences;

J. whereas complexity and interconnection among financial sectors has gained importance, with NBFIs being net lenders to banks and the wider economy;

K. whereas the footprint of NBFIs in strategic financial markets, such as sovereign bond markets, has grown, as demonstrated by the unwinding of cash-futures basis trades by hedge funds in the US treasury market during the tariff crisis of April 2025;

L. whereas vulnerabilities in EU money market funds remain unaddressed, with the EU lagging behind the United States and the United Kingdom in regulatory reforms;

M. whereas the financial sector remains vulnerable to cyber threats, hybrid warfare tactics and hidden leverage that could destabilise critical financial infrastructure;

CMU: shock absorption and resilience

1. Welcomes the renewed debate on the need to restore EU productivity through better integrated capital markets, boosted by the Draghi and Letta reports;

2. Calls on the Commission to prioritise a CMU agenda that supports EU competitiveness while not hampering financial stability;

3. Notes the challenges stemming from more integrated financial markets, including the trade-off between efficient risk sharing and diversification, on the one hand, and contagion, spillover and amplification risks, on the other hand;

4. Stresses the importance of maintaining access to capital while preserving financial stability;

Macro-financial risks and geopolitical fragility

5. Welcomes the ECB’s efforts to maintain price stability and the key role of the ESRB in contributing to financial stability in the Union;

6. Notes the Union’s exposure to external shocks via strong interlinkages with foreign financial markets and entities, and pressures from rising trade tensions amid geopolitical uncertainty;

7. Emphasises the risks of high sovereign debt and deficits, particularly through the sovereign-bank nexus;

8. Stresses that structural reforms could elevate the international role of the euro and bolster financial and monetary stability;

9. Highlights the potential instability stemming from highly leveraged financial institutions, such as hedge funds, especially during market corrections;

10. Stresses the importance of coordination among macroprudential supervisors through systemic risk analysis and oversight;

Banking sector stress and NBFI oversight

11. Emphasises the need for full implementation of the Basel III framework to enhance the resilience and global competitiveness of EU banks;

12. Highlights the importance of keeping a sound macroprudential framework for banks with a view to simplification, legal clarification and burden reduction;

13. Notes increased vulnerabilities in commercial real estate markets, compounded by rising rates and NBFI exposures;

14. Calls for an assessment of financial institutions’ exposure to geopolitical risks, including indirect effects of sanctions and economic fragmentation;

15. Acknowledges the growing systemic relevance of NBFIs, which comprise over 40 % of the EU financial sector’s assets; considers that such entities may contribute to financial stability risks when insufficiently regulated;

16. Calls for a thorough review of regulatory gaps, including in less regulated areas such as family offices and supply chain finance companies;

17. Calls on the Commission to reform the Money Market Funds Regulation in line with international standards, regulatory progress made in other jurisdictions and the recommendations of the ESRB and ESMA;

Liquidity, margining and digital risks

18. Highlights the fact that margin calls during crises such as COVID-19 and the 2022 energy turmoil drove significant liquidity stress;

19. Calls for tools to better capture the scale and speed of liquidity outflows resulting from margin calls during systemic events, especially for energy utilities and NBFIs;

20. Stresses the need for resilient clearing infrastructure, robust collateral frameworks and coordinated supervision of central counterparties;

21. Supports greater transparency and macroprudential oversight in margining practices, including stress testing and scenario analysis;

22. Expresses its concern regarding growing interlinkages between crypto-asset and decentralised finance markets and the traditional financial system; supports the FSB, the standard-setting bodies and the ESRB in their efforts to install a regulatory framework and harmonise its classification;

23. Flags the potentially systemic relevance of developments in the markets for crypto-assets;

24. Encourages investments in cyber-resilience to protect financial infrastructure against external threats;

Enhancing supervisory coordination, data capabilities and crisis preparedness

25. Supports a holistic, system-wide and activity-based supervisory approach to dealing with risks and vulnerabilities associated with different types of activity across the financial sector, such as lending, transactions and asset management;

26. Emphasises the role of the Single Resolution Mechanism (SRM) in ensuring robust crisis resolution and the ECB’s function as lender of last resort to safeguard liquidity and trust during crises;

27. Supports the ECB, the ESRB and the European supervisory authorities in safeguarding EU financial stability and addressing emerging global financial risks;

28. Warns against regulatory arbitrage and underlines the need to address hidden leverage vulnerabilities revealed in past disruptions;

29. Underscores that authorities, both at national and EU level, should have qualitative, easily accessible data and have adequate resources to analyse the data;

30. Calls for enhanced data sharing among national and EU authorities, including in order to support a more comprehensive risk monitoring framework and stress-testing capabilities;

31. Calls for strengthened cooperation with international financial institutions, including the IMF and the FSB, to tackle cross-border stability risks;

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32. Instructs its President to forward this resolution to the Council and the Commission.

EXPLANATORY STATEMENT

Financial stability is a cornerstone of the EU’s economic resilience, especially in an era marked by significant geopolitical uncertainty, heightened market volatility, and structural changes. Recent events, such as energy market disruptions, geo-military tensions, trade wars, and financial market turmoil, have demonstrated the urgent need to address emerging risks and vulnerabilities before they escalate into systemic crises.

A well-functioning and fully integrated Capital Markets Union (CMU) is critical for both the stability and future growth of the EU. While deeper market integration can enhance investment flows and economic resilience, your Rapporteur believes that it is at least equally important to balance these benefits with adequate safeguards to mitigate potential risks. He highlights the importance of moving forward with reforms along the lines of those proposed in the Draghi and Letta reports to ensure that the EU’s capital markets are competitive but also stable.

The draft report also identifies several macro-financial risks, including rising sovereign debt levels, exposure to external shocks, and vulnerabilities in the non-bank financial intermediation (NBFI) sector. High asset valuations, the growing influence of decentralised finance, and the risks posed by margining practices are all factors that require careful regulatory attention. In addressing these concerns, your Rapporteur stresses the need for robust crisis preparedness mechanisms to safeguard the EU’s financial system.

Finally, it is crucial that financial supervision across the EU be enhanced to reflect the increasingly complex and interconnected global financial environment. Effective coordination between macro-prudential supervisors, access to granular data, and an ability to respond quickly to emerging risks are fundamental for safeguarding financial stability. Your rapporteur also highlights the need for stronger cooperation with international financial bodies to manage cross-border risks and ensure a coordinated response to financial instability.