Navigating financial stability challenges from geoeconomic fragmentation and digital innovation

The Analysis Working Group (AWG) of the European Systemic Risk Board (ESRB) and the Macroprudential Analysis Group (MPAG) of the European Central Bank (ECB) will hold their annual workshop in Munich, 30 June 2025, jointly hosted by the Deutsche Bundesbank.

Background

In an era that witnesses a strong interplay between geoeconomic fragmentation and rapid digital innovation, anticipating and adapting to the consequential effects of such shifts have become imperative principles - rather than options - for Europe. 

The foundation of the post-war international order is becoming increasingly fragile. We are witnessing an intensification of military tensions, the rise of protectionist policies, and an increase in cyber warfare. In today’s highly interconnected financial landscape, geoeconomic shocks can have far-reaching and heterogenous effects on macroeconomic, financial, and corporate dynamics, posing significant challenges to financial stability.

Alongside geoeconomic fragmentation, there has been rapid growth in digital innovation – notably in fields such as artificial intelligence (AI). While such technological progress holds considerable productive promise, it also presents unique challenges for financial stability – including concentration risks, herding behaviour, cybersecurity threats and the potential for spikes in volatility amid higher speed of flows of news and transactions.

Objectives

The workshop will provide a platform to share and discuss empirical studies, theoretical models and methodological tools aimed at understanding the systemic risk consequences associated with geoeconomic fragmentation alongside challenges linked to digital innovations, particularly artificial intelligence. Additionally, it seeks to foster dialogue and collaboration to develop macroprudential strategies that address emerging vulnerabilities, mitigate systemic risks, and enhance the resilience of financial systems.

We welcome submissions addressing geoeconomic fragmentation and/or digital innovation, focusing on any of the topics outlined below.

Analysing key trends in geoeconomic fragmentation and digital innovation that could yield financial stability relevant shocks.

• Frameworks for measuring financial stability risks from geoeconomic fragmentation, including geopolitical tensions, trade-related vulnerabilities, and political uncertainty can be assessed through analytical frameworks leveraging trade, financial, and text-based data
• Salient features of the rise of digital innovation in the financial system, notably related to artificial intelligence
• Interactions between geoeconomic fragmentation, cyber risk and digital innovation

Financial stability implications of geoeconomic fragmentation and digital innovation.

• Channels directly related to the key players in the financial sector. Geoeconomic fragmentation and digital innovation may influence financial stability through financial institutions (e.g., banks, investment funds, insurers) and payment systems, with a focus on risks related to liquidity, solvency, and operational aspects
• Channels related to broader financial markets. Financial stability implications can work through the impact on assets’ price and volatility (e.g., equity, bond, foreign exchange or commodity markets) as well as shifts in market characteristics (e.g., market microstructure, herding behaviour, competitiveness of European capital markets vis-à-vis global peers)
• Channels related to interactions of the financial sector with the real economy. The stability of the financial system may be influenced by geoeconomic fragmentation and rapid digital innovation through their effects on the real economy. These financial stability channels may involve analysing the performance and decisions of corporates, households, and sovereigns, from a macro-financial and/or granular perspective

The organisers welcome submissions from academics, authors working for members of the European System of Central Banks, the Single Supervisory Mechanism, or the European Systemic Risk Board, as well as members of other organisations or international financial institutions with a professional interest in the topics outlined above.

Interested authors should send either completed draft papers (strongly preferred) or extended abstracts by email to euriskworkshop@ecb.europa.eu by 14 April 2025 cob, with the subject “AWG/MPAG workshop submission”. All submissions should be in English (in PDF format) and should include an abstract, as well as the name and email address of a nominated author who could present the paper.

Selection process

The organising committee will review all submissions received by the deadline, looking at their quality, their analytical relevance, and the level of interest that they are likely to generate. The committee will also take into account the overall balance of the workshop, in terms of subject matter and approaches. All authors will be notified by 5 May 2025, as to whether their papers have been accepted.

Expenses

The travel and accommodation expenses of all attendees, presenters and discussants should be covered by their own organisations. No submission or participation fees will be charged.

Organising committee

• Paul Hiebert, AWG-MPAG Co-Chair
• Katja Taipalus, AWG-MPAG Co-Chair
• Tuomas Peltonen, ESRB Secretariat
• Thilo Liebig, Deutsche Bundesbank
• Raffaele Giuliana, AWG Secretary
• Marco van Hengel, MPAG Secretary
• Shirley Simmons-Nocca, ESRB Secretariat
• Anne McTaggart, MPAG Secretariat