ECB’s Kazāks: Europe Already “At War” With Russia, Banks Must Prepare

18 January 2026

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks warned that European policymakers should not be “naive” about the bloc’s exposure to Russia and said the financial system needed to be prepared for escalation.

In an interview with the Financial Times published Sunday, Kazāks, the governor of Latvia’s central bank, Latvijas Banka, argued that Europe was already “at war” with Russia even if the conflict was not taking place “physically on our ground.”

Pointing to cyber attacks, sabotage of underwater cables in the Baltic Sea and drone violations of Danish airspace, Kazāks said, “We need to be resilient to deal with that.”

Kazāks is among six contenders to succeed Luis de Guindos as ECB vice president when the current vice president’s non-renewable eight-year term expires at the end of May, with euro area finance ministers possibly deciding on a successor as soon as Monday.

Kazāks described contingency planning work in Latvia over recent years aimed at maintaining the availability of cash and digital payments during crises, including requirements for banks to operate networks of “critically important” ATMs, some with their own electricity generators.

He also cited the development of “offline physical card payments” at essential merchants such as pharmacies, gas stations, and food retailers.

“We are in many cases best in the class and other countries are emulating our solutions,” Kazāks said, adding that Latvia was “happy to share” the measures.

The contingency planning was designed to address not only the risk of a Russian attack but also scenarios such as floods and other climate-related risks, he said.

Kazāks also warned that military conflict on the territory of a euro area member could generate financial stability strains, banking-system problems, and debt-sustainability concerns that could move market spreads. “You might have spreads moving around,” he said.

Those risks were “marginal” and manageable at the European level, Kazāks said, arguing that the EU could reduce the probability of direct conflict by supporting Ukraine so that Moscow “does not win in Ukraine” and by strengthening European military capacity to deter aggression.