Euro area systemic stress has remained contained despite a challenging external and financial environment. Rising vulnerabilities stemming from emerging market economies (EMEs), coupled with occasional bouts of financial market turbulence, have tested the resilience of the euro area financial system over the past six months. Overall, the euro area financial system has been able to absorb the tensions, with standard indicators of bank, sovereign and financial stress all standing at low levels in mid-May 2016 (see Chart 1). Vulnerabilities arising from slowing EME growth prospects have continued to rise since the ... (full story)