Bundesbank flags elevated financial stability risks from valuations, credit, AI cyber threats

The Bundesbank's 2026 Financial Stability Review warns that while the German financial system is resilient, risks remain elevated due to high market valuations, rising credit risk, real estate vulnerabilities, high sovereign debt, and the growing private credit market. It also highlights AI and hybrid threats increasing cyber risk to critical financial services. This signals a cautious regulatory stance that could influence market sentiment and risk pricing.

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