{"text":[[{"start":7.4,"text":"US President Donald Trump risks triggering a financial crisis, the European Central Bank has warned, citing his war with Iran, repeatedly changing trade policies and retreat from international co-operation."}],[{"start":19.65,"text":"The risk of a geopolitical shock sparking a financial crisis is intensifying because of increasingly “stretched” asset valuations and doubts about the sustainability of high government debt levels, the ECB said in its twice-yearly financial stability review."}],[{"start":35.8,"text":"The Middle East conflict, which began when the US and Israel launched strikes on Iran on February 28, is putting the resilience of the financial system “to the test”, ECB vice-president Luis de Guindos wrote in his final review before stepping down at the end of May."}],[{"start":50.949999999999996,"text":"“While the full impact of the war is unclear at this stage, the repercussions for the global economy and financial stability are becoming graver the longer it lasts,” he said. Iran said it would respond to US air strikes on Monday as mediators continued talks to extend a ceasefire agreement."}],[{"start":67.5,"text":"As well as the economic fallout from the Iran war pushing up inflation and damaging growth, the ECB blamed volatility in US trade policies and fears that Trump is pulling Washington back from its traditional global leadership role for exacerbating the threats to the financial system."}],[{"start":85.05,"text":"“Uncertainty surrounding the commitment of the US administration to multilateral co-operation is also increasing the risk that policy shocks will disrupt the international order and spur geoeconomic and regulatory fragmentation around the globe,” the Eurozone central bank said."}],[{"start":101.9,"text":"“Tariff announcements, pauses and reversals have become a structural feature of the global environment,” it added. "}],[{"start":108.7,"text":"The ECB said it was increasingly concerned about the threat of cyber attacks and other forms of hybrid warfare, such as sabotage."}],[{"start":116.4,"text":"“Hybrid threats are adding to the risks facing the operating environment, especially if targeted at critical infrastructure,” it said, adding that new AI models increase the danger of cyber attacks causing “severe and widespread disruption”."}],[{"start":130.15,"text":"The FT revealed last week that the central bank had summoned Eurozone lenders to a meeting on Tuesday to discuss the IT vulnerabilities exposed by the latest AI models such as Anthropic’s Claude Mythos Preview. "}],[{"start":143.05,"text":"A large US bank that has access to Mythos gave a presentation about it at Tuesday’s meeting to Eurozone-based banks that have all been refused access to Anthropic’s new AI model, de Guindos told reporters on Wednesday. “Banks have to invest much more in cyber security, not only large banks but small banks can be systemic here too,” he said."}],[{"start":163,"text":"The ECB is also worried about the shift of high volumes of lending away from banks and into more opaque areas of finance such as private credit and the likelihood that more borrowers will struggle to service their debts if geopolitical tensions keep pushing up borrowing costs."}],[{"start":179.2,"text":"“A more persistent disruption of energy supply and notably weaker growth could trigger a reassessment of sovereign risk by market participants,” the ECB said in the review. “The growing presence of more price-sensitive investors like hedge funds in euro area sovereign bond markets could amplify any abrupt repricing of sovereign risk.”"}],[{"start":198.85,"text":"Investors seemed too optimistic in the face of these risks, the ECB said. It pointed out that equity market valuations were “stretched by historical standards” while bond risk premia — the extra yield investors demand to lend to riskier borrowers — were “compressed globally”."}],[{"start":215.5,"text":"“Consequently, there is a fair risk that financial market sentiment could deteriorate, as downside risks related to geopolitical, fiscal and macro-financial developments appear underestimated,” the ECB said."}],[{"start":226.5,"text":"De Guindos added that markets were counting on a “very benign situation” emerging from the Middle East conflict that avoided a sustained rise in inflation or problems in private credit and sovereign bond market. "}],[{"start":237.5,"text":"“In combination with complacency it could give rise to a change in markets,” he said, describing the upbeat mood among investors as a “bittersweet situation”."}],[{"start":254.75,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779882465_7333.mp3"}