ECB: Boris Vujčić: Integrated, open and resilient: Europe’s strengths in a fragmenting world

The summary above is from the announcement ECB published on November 2, 2026.

What the announcement says

Speech by Boris Vujčić, Vice-President of the ECB, at the Central Bank of Ireland’s Financial System Conference

Thank you to the Central Bank of Ireland for organising this conference and inviting me to speak. It is a great pleasure to be here in Dublin. Ireland illustrates why the topics of today’s event – from geopolitics to financial resilience – are timely.

Ireland has one of the most open economies in the world and it is deeply integrated into European and global markets. It is a Single Market success story, and a reminder that openness remains one of Europe’s greatest strengths.

But openness works both ways. A shift in US trade policy or a turn in global capital flows can spill over to the Irish economy particularly quickly.

What is true for Ireland is also true on a larger scale for the EU, the world’s largest trading bloc.[1] So, the question I would like to discuss today is simple to ask but harder to answer: how do we retain the benefits of an open economy in a more uncertain world increasingly shaped by geopolitics?

My answer in a single sentence is: not by retreating from openness, but by building the resilience that allows this openness to endure.

Let me start with the environment we are facing. Geopolitical shocks are becoming more frequent. They affect growth and inflation directly, and they can threaten financial stability.

We have seen this repeatedly in recent years. Russia’s unjustified war against Ukraine and the conflict in the Middle East have triggered severe disruptions in energy markets. Tariffs have renewed uncertainty and redirected global trade flows, while restrictions on exports of critical technologies and raw materials have reinforced the value of strategic autonomy (Slide 2, left-hand side). Alongside these developments, we have seen sanctions regimes, cyber threats and a step change in security and defence spending.

The result is a different macroeconomic environment. Inflation, for example, is now driven more often by supply shocks – in the past six years supply factors have played a role in three major shocks: in 2020, 2022 and 2026. And we are faced with more volatile energy prices as well as greater uncertainty about the outlook (Slide 2, right-hand side).

These shocks can also be transmitted through financial channels. Bond and equity prices may come under pressure, while investment funds could face outflows that amplify market movements.[2] Banks exposed to affected countries, sectors or markets may experience losses that weigh on capital or raise funding costs, potentially leading them to tighten lending.[3]

So far, the financial system has absorbed each of these shocks remarkably well. But financial effects can be highly non-linear and typically emerge abruptly: past resilience is no reason for complacency.

We cannot prevent geopolitical shocks. And pulling back from the world would not shield us from such shocks: while a fragmenting world means fewer links, it also means that those links are more concentrated. The result is less diversification and higher risk.

Energy is the clearest, and unfortunately a recurring, example.

The EU imports 57% of its energy, and almost all of its oil and gas. Before 2022, much of that came from Russia. That is why Russia’s invasion of Ukraine caused the EU’s largest energy shock since the 1970s.

Europe responded. We diversified our energy supplies by increasing liquefied natural gas (LNG) import capacity and reduced our dependence on Russia. This is an important achievement. But diversification alone could not shield us when tensions erupted in the Middle East earlier this year.

This showed us that exposure is only half the story. The other half is about resilience – in other words, how well we absorb the shocks.

For the financial sector, resilience means strong capital and liquidity buffers, diversified funding, and payment and settlement systems that can withstand operational and cyber threats.

ECB

Policy decisions and official commentary move currency and index pricing, and they shape the cost of holding a leveraged position.

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