Political uncertainty is putting the eurozone’s financial stability at risk, according to the European Central Bank.
The Brexit referendum and the US election both ratcheted up what it calls its “composite indicator of systemic stress”.
It says the 19 countries that use the euro could be hit by trade wars, higher inflation and rising US interest rates.
In a worst-case scenario, the ECB says, this could reignite the 2009 eurozone debt crisis.
It also warned that some stock markets could be heading for sharp falls. “Valuation measures… are in some regions hovering at levels which, in the past, have been harbingers of impending large corrections.”
The bank is also worried about political uncertainty within the eurozone, with a constitutional referendum in Italy on 4 December and elections in France and Germany next year.
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