Financial Stress and Systemic Risk Management in Spain
Financial Stress and Systemic Risk Management in Spain

Author(s): Daniel Alejandre
Subject(s): Economy, Business Economy / Management, Financial Markets
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: financial stability; systemic risk; stress testing; non-bank financial sector and cyber resilience
Summary/Abstract: This paper examines financial stress conditions and systemic risk management in Spain, drawing on evidence from the Bank of Spain’s Spring 2025 Financial Stability Report. The analysis begins by outlining the macroeconomic and financial context, highlighting the evolution of household, corporate, and public sector vulnerabilities. It then assesses the performance and resilience of the Spanish banking system, focusing on profitability, solvency, and liquidity indicators. Stress-testing results and systemic risk metrics are reviewed to identify key vulnerabilities, including exposure to sovereign debt and real estate markets. The paper also explores emerging sources of systemic risk, such as geopolitical tensions, inflationary pressures, and risks stemming from the non-bank financial sector. Finally, it evaluates the macroprudential policy framework and recent measures implemented by the Bank of Spain, including the activation of the countercyclical capital buffer. By combining descriptive evidence with analytical insights, the study aims to provide a comprehensive view of Spain’s financial stability and the effectiveness of current risk management strategies.

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