FRANKFURT/MADRID — July 15, 2025 — The European Central Bank (ECB) is intensifying its oversight of eurozone banks amid mounting global threats, including trade tariffs, cyber attacks, and the risk of a U.S. dollar liquidity crunch, according to five senior central bank officials speaking anonymously to Reuters.

“The ECB will test banks’ resilience to geopolitical risk next year,” said Chief ECB Supervisor Claudia Buch, who confirmed that the 2026 supervisory stress tests will include capital-depleting scenarios related to conflict and global economic fragmentation.

Geopolitical and Economic Risks Trigger Heightened Scrutiny

The ECB is acting as global trade tensions escalate, particularly following President Trump’s reimposition of broad tariffs in Q2 2025, as well as ongoing instability tied to the war in Ukraine. These geopolitical developments are being factored into the Supervisory Review and Evaluation Process (SREP) and banks’ own Internal Liquidity Adequacy Assessments (ILAAP).

Officials have directed banks to:

• Assess foreign credit exposure, especially to economies entangled in trade disputes

• Tighten liquidity contingency plans, particularly regarding potential dollar shortages

• Enhance cyber resilience, with special focus on Baltic states, which remain targets of Russian cyber activity

Though the ECB is not mandating reductions in specific exposures, it is urging stricter internal controls and more robust scenario planning.

Cybersecurity and Dollar Liquidity Take Center Stage

The ECB sees cyber attacks as a growing systemic risk, particularly following recent attacks in Eastern Europe and a heightened threat environment linked to state-sponsored groups. Supervisors are monitoring institutions’ IT infrastructure and crisis-response protocols.

Simultaneously, concerns are rising around a potential global dollar shortage, especially if the U.S. Federal Reserve pulls back liquidity facilities that supported European banks during past crises. Reuters reported earlier this year that the ECB warned banks to model “dollar drought” scenarios.

ECB Stress Testing Geopolitical Shocks in 2026

Next year, the ECB will require banks to run capital-impact scenarios based on escalating geopolitical shocks, part of a more aggressive stance on forward-looking risk identification.

While not yet public, central bank sources say these scenarios may include:

• A complete cut-off of cross-border dollar funding

• Cyberattacks that shut down banking services in multiple countries

• Extended trade war disruptions impacting major EU exporters

Conclusion: A New Supervisory Tone at the ECB

The ECB’s proactive posture under Claudia Buch marks a broader shift in banking supervision, from purely financial stress to multi-dimensional risk, encompassing technology, geopolitics, and currency liquidity.

While no formal recommendations or mandates have been issued yet, banks are on notice: the ECB expects early action, not just regulatory compliance, as Europe’s financial sector faces an increasingly unstable global environment.