Eurozone financial stability outlook remains fragile: ECB

The combination of more restrictive monetary policy and sticky inflation will continue to weigh on financial stability in the zone, the European Central Bank (ECB) said in a report published in Frankfurt on Wednesday.
The Financial Stability Review, which the bank releases twice a year, showed that financial markets "remain vulnerable to less favorable growth and inflation outcomes."

According to the report, banks in the eurozone, whose fundamentals are "solid," turned out to be resilient in the wake of the banking sector crisis in the United States. However, the ECB noted that events like the U.S. banking crisis "could lead to a reassessment of the profitability and liquidity outlooks for eurozone banks" as interest rates are inching higher.

The report also warned of a higher potential for "disorderly adjustments in financial markets" while borrowing costs are soaring.