The ECB has warned of further uncertainty ahead in its latest financial stability review, saying that medium-term risks have increased ‘markedly’ due to the pandemic and existing vulnerabilities. However, it says, wide-ranging policy intervention have helped to stem the worst-case scenario.
In a reminder of the uncertainty ahead, the ECB is said to be currently preparing its contingency plans to be able to continue its QE programme if Germany’s Bundesbank does withdraw. A German constitutional court ruling says that the ECB needs to show that the programme is justifiable under German law by August. If not, the Bundesbank will be forced to leave the scheme, although talk has also floated of the EU taking legal action against Germany on this.
Tomorrow will be a key day for the Eurozone, with a number of important data releases, including services, industrial and consumer sentiment, as well as business confidence.
