Heightened risk of cyber attacks and market corrections due to geopolitical unrest

These risks are not isolated phenomena. Overall, geopolitical tensions and geo-economic fragmentation remain the key risk factors for financial stability. The ongoing conflict in the Middle East could prompt a sustained rise in energy prices, which may result in higher inflation and a deceleration in economic growth. In addition, geopolitical tensions and geo-economic fragmentation compound existing vulnerabilities, including cyber and operational risks, government debt levels, and potential losses in highly valued financial markets and private credit.

DNB Governor Olaf Sleijpen said today: “The risks for financial stability in the Netherlands remain elevated amid persistent geopolitical and economic turbulence.” We are still under ‘code amber’. Fortunately, our stress test shows that banks are resilient to potential losses resulting from a prolonged war in the Middle East. This proves once again that robust buffers are of paramount importance for financial institutions.”

Geopolitical tensions and technology amplify cyber risks

The combination of geopolitical tensions and rapid technological developments is intensifying the need for digital resilience. The likelihood of cyber and hybrid incidents is increasing, while cyber threats can emerge instantly thanks to powerful generative AI models. This raises the bar for financial institutions to address vulnerabilities swiftly, recover in a timely manner and implement effective fallback methods. Furthermore, these developments underscore the importance of a European approach, both in the development of AI technology and in strengthening international information exchange on the opportunities and risks posed by these new generative AI models.

Stress test: banks are resilient to financial losses caused by the war in the Middle East

The stress test discussed in the FSR shows that Dutch banks are well equipped to absorb any potential future losses resulting from an escalation of the war in the Middle East. In a scenario with lower revenues, higher credit losses and an increase in risk-weighted assets, banks remain resilient thanks to solid capital buffers: the average core capital ratio falls by around 2 percentage points but remains above the requirements at 15.7%. Should the conflict drag on, the risks will increase, however, including in the form of mounting credit losses.

Private credit under the microscope

Private credit refers to corporate loans that are not traded on a stock exchange and are provided by institutions other than banks. In itself, the rise of private credit is a positive development – it increases diversity in credit markets and reduces reliance on bank financing. However, assessing risks can be challenging as loan quality is often unclear and the private credit sector is highly interconnected with other financial institutions. From a financial stability perspective, it is therefore important to preserve the economic benefits of private credit, while at the same time gaining a better understanding of the exposures and interconnections between financial institutions.

Earlier this year, we issued a request for information among the largest Dutch pension funds and insurers regarding their private investments. Initial results show that the total private credit exposures of the largest insurers have increased by around a third over the past four years, reaching over €16 billion in 2025, equivalent to around 8% of their assets under management.

Keep monitoring growth of the stablecoin market

Stablecoins are crypto-assets designed to maintain a stable value relative to a conventional currency, such as the dollar or the euro. Their market size has doubled over the past two years to around $300 billion. The direct exposures of Dutch households and financial institutions are marginal. As stablecoins continue to proliferate, their interconnectedness with the financial system is increasing. This could cause greater price volatility in financial markets and changes to banks’ funding structures. Differences in regulations across jurisdictions can exacerbate these risks, underscoring the importance of consistent global standards.

Risk table illustrating financial stability in the Netherlands

Media representatives can contact Bouke Bergsma by telephone at +31 653 258 400 or by email at bouke.bergsma@dnb.nl.