ECB identifies rise of populist politicians in eurozone as risk

The ECB has warned that risks of financial market turmoil have increased amid slower growth in emerging economies, weak bank profitability, and the rise of populist movements across the 19-nation euro region.

“A sharper-than-expected fall in Chinese growth could well lead to a synchronised downturn across other emerging-market economies, particularly commodity-exporting economies,” the ECB wrote in its twice-yearly Financial Stability Review published yesterday.

“Under such a scenario, the financial systems of advanced economies may be challenged by a reduction in consumer and business confidence, and renewed financial market volatility potentially intensified by sudden stops in or reversals of cross-border capital flows,” it said.