BNR: Risks to financial stability remain elevated, amid domestic imbalances and geopolitical tensions 

   Risks to financial stability remain elevated, similar to the assessments in the previous report, amid the persistence of domestic imbalances and vulnerabilities, as well as the amplification of geopolitical tensions at a global level, according to the Financial Stability Report of June 2026, published on Monday by the National Bank of Romania (BNR)."The level of risks to financial stability remains high, similar to the assessments in the previous Report, against the backdrop of persistent imbalances and vulnerabilities both domestically and globally. The amplification of geopolitical conflicts, growing geo-economic fragmentation or uncertainties regarding the evolution of prices in the energy sector continue to represent risk factors for the economic outlook and the stability of financial markets. In this context, the Romanian banking sector remains resilient, benefiting from an adequate level of capitalization, liquidity and prudent risk management policies, but the partial materialization of the mentioned vulnerabilities may erode this solid foundation, in the short and medium term," the report states.According to the report, the conflict in the Middle East and the blockade of the Strait of Hormuz are generating supply-side shocks, affecting the global economy and inflation, while high public debt and large fiscal deficits are amplifying sovereign risk and reducing the scope for support measures. At the same time, still high valuations in capital markets maintain the risk of further sharp asset corrections.Regarding the deterioration of domestic macroeconomic balances, economic activity continued to evolve at a modest pace in 2025, below expectations formulated at the beginning of the year and in a slight deceleration compared to the previous year"Although recent developments indicate an attenuation of the budget deficit, as a result of the fiscal-budgetary consolidation process, the adjustment is being made from particularly high initial levels, and the risks related to the absorption of European funds, especially those from the NRRP program, remain significant", the report also states.As to the risk of non-repayment of loans contracted by the non-governmental sector, the financial situation of companies deteriorated, but remains outside the risk zone. "Vulnerabilities of the population remain low. The quality of the loan portfolio granted by banks to the population has improved, while the deterioration trend has continued at the level of non-financial companies," the document also reads.The report also refers to the risk associated with challenges to cybersecurity and financial innovation. "The interactions between cyber, technological and geopolitical risks determine an increase in the complexity of the overall risk profile of the financial sector," the document also states. At the same time, the implementation of DORA contributes to strengthening the digital operational resilience of the financial sector.From a cyclical perspective, two systemic risks of a severe level and two other risks assessed at a moderate level were identified. The risks assessed at a severe level concern: global uncertainties in the context of multiple geopolitical events and the deterioration of domestic macroeconomic balances, both with a constant outlook in the coming period.At the same time, two systemic risks of moderate intensity were identified: the risk of non-repayment of loans contracted by the non-governmental sector, with a growing trend in the coming period, driven in particular by the non-financial companies segment, and the risk associated with challenges to cybersecurity and financial innovation, for which the outlook is for intensification."Since the publication of the previous Report, risks to financial stability stemming from the external environment have intensified. The energy crisis generated by the escalation of the conflict in the Middle East and the severe disruption of trade flows through the Strait of Hormuz has generated a global supply-side shock, with implications for energy and food security, the outlook for economic growth and inflation, and global risk appetite," the report's authors argue.According to the BNR, increased uncertainties regarding the duration and intensity of the conflict have contributed to the manifestation of recurrent episodes of volatility in international financial markets and to wider fluctuations in capital flows."Although the global economy and the international financial system have remained resilient to date, and corrections in financial asset prices have occurred in a relatively orderly manner, a prolongation or intensification of the conflict would amplify tensions in energy markets and lead to a further tightening of financial conditions," the document also states.At the same time, high levels of public debt and the persistence of large fiscal deficits internationally continue to fuel tensions regarding sovereign risk perceptions, including at European level, and limit the fiscal space available for adopting support measures to mitigate the impact of the energy shock.Also, valuations in capital markets remain elevated despite recent corrections, which may amplify the risk of abrupt adjustments in asset prices. "This risk is exacerbated by the high concentration of stock market indices in technology companies, especially those associated with artificial intelligence, whose valuations incorporate optimistic expectations regarding future profitability, which increases the likelihood that a reassessment of the growth prospects of the technology sector, the pace of adoption of new technologies or the profitability of investments in the related infrastructure will generate disproportionate price corrections across the capital market," the report's authors argue.Domestically, risks to financial stability generated by domestic macroeconomic imbalances remain significant. These have been fueled by increasing political and geopolitical uncertainties, in a fragile macroeconomic context, marked by modest economic growth and persistent twin deficits, the BNR notes."Although recent developments indicate a relative reduction in the budget deficit, as a result of the fiscal-budgetary consolidation process, which also contributes to reducing pressures on the external imbalance, the adjustment is being made from particularly high initial levels, with Romania recording the largest deficits (fiscal and current account) in the EU," the document also shows.In ESA terms, the budget deficit stood at 7.9% of GDP in 2025, and according to the European Commission's 2026 spring forecast, it is expected to decrease to 6.2% of GDP in 2026, levels that highlight the persistence of pressures on public finances. In addition, economic activity continued to evolve at a modest pace in 2025, slightly decelerating compared to the previous year.For 2025, real GDP growth stood at 0.7%, compared to 0.95% in 2024.According to the document, the evolution reflects the effects of fiscal adjustment, the moderation of domestic demand and the decrease in the purchasing power of the population. "A positive aspect, however, is the reorientation of the economic growth model, from one based predominantly on consumption to one supported by investments," the Report also shows.