ECB’s Escrivá: Markets Could Be Underestimating Risks of US Policies

26 September 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member José Luis Escrivá said on Friday that markets’ failure to price in risks related to U.S. trade policies, expansionary fiscal measures, and institutional weakening did not mean that significant negative effects could not materialize in the short or medium term.

Speaking at the Conferencia 40 Aniversario de FEDEA in Madrid, Escrivá, who heads the Banco de España, said that the US’ reputation as an economic and institutional benchmark was showing signs of strain, according to a speech provided by the central bank.

The speech highlighted risks arising from trade protectionism, U.S. expansionary fiscal policies, and institutional erosion, factors that markets did “not seem to be incorporating … into their valuations.”

“But the fact that they are not yet reflected in financial indicators does not mean that recent developments cannot generate significant negative impacts in the short or medium term,” the text said.

It added that the economy was moving into a more fragile environment, with little clarity regarding either the scale of potential consequences or the timing of their materialization.

Escrivá’s official remarks also referred to the “extreme uncertainty” of the outlook, underscoring the need to examine vulnerabilities with greater scrutiny.