Financial stability further under pressure due to Iran war

Financial crime Liquidity risks Operational risks due to technological acceleration Geopolitical and economic uncertainty AI Market sentiment more driven by short-term risks ? Now Long-term ANALYSIS REPORT MAY 2026 Financial Stability Report In brief Financial stability is under increasing pressure due to a combination of geopolitical escalations, higher inflation expectations, and weakening economic growth. Digitalization and AI adoption increase both the efficiency and the vulnerability of the financial system, inter alia via cyber risks, fraud, and dependence on a limited number of service providers. On capital markets, uncertainty leads to greater volatility, and share prices are increasingly driven by short-term sentiment. In the asset management sector, liquidity risks require adequate risk management, and the growth of private markets poses a greater risk. The housing market remains tight, although price growth is moderating somewhat.

ANALYSIS REPORT

1. Introduction and summary 3
2. General trends and risks 5 2.1 Geopolitical and macroeconomic developments 5 2.2 Digitalization and operational risks 10 2.3 Sustainability 11
3. Trends and risks on capital markets 13 3.1 Trends and developments 13 3.2 Money markets 18 3.3 Crypto 19 3.4 AI risks 20
4. Trends and risks in the asset management sector 22 4.1 Trends and developments 22 4.2 Liquidity risks 22 4.3 Pension transition 26 4.4 Digital resilience 27 4.5 Private credit 27
5. Risks for customers of institutions 30 5.1 Financial crime 30 5.2 Retail investments 33 5.3 Housing market 37 Contents

Financial Stability Report 3 ANALYSIS REPORT

1. Introduction and summary Geopolitical tensions, less favorable economic outlooks, and structural uncertainty dominate the risk landscape. The escalation of geopolitical conflicts, particularly in the Middle East, has broad spillover effects on energy and commodity markets, trade flows, and financial markets. Inflation expectations have been revised upward, and economic growth is weakening. Higher prices and weaker growth affect household and corporate wealth, particularly if the conflict persists. Furthermore, financial stability risks are increasing through volatility on capital markets and rising operational risks at financial institutions. Digitalization increases the efficiency of the financial sector but simultaneously increases vulnerability due to strong dependence on digital infrastructure and a limited group of cloud and AI service providers. Cyber incidents are rising sharply due to geopolitical tensions and are becoming more advanced and less predictable through generative AI, with risks of large-scale operational disruptions and financial instability. AI also leads to further professionalization and scaling of fraud practices, as attacks can be executed more targeted, convincing, and efficiently. On capital markets, AI is increasingly used intensively, which can lead to faster information processing, lower costs, and better price formation. At the same time, the complexity and limited explainability of AI models make markets less transparent and increase risks to market integrity, higher volatility, and unintended manipulation, particularly in cases of autonomous and homogeneous algorithmic behavior. For asset managers, digitalization and increasing AI use translate into higher operational risks and cyber vulnerabilities, which are exacerbated by geopolitical tensions and dependence on external IT and data service providers. On capital markets, this uncertainty manifests as increased volatility and greater sensitivity to sudden repricing. Share prices are increasingly driven by short-term developments and market sentiment, while underlying structural risks are not always fully priced in. This increases the likelihood of abrupt corrections, particularly in markets with high valuations or where leverage and interconnectedness exist. The war in the Middle East has also caused volatility and price increases in oil and gas markets, which will ultimately feed into inflation. On money markets, risks exist from the interaction between repo markets and the government bond market. During periods of market stress, shocks can spill over to other parts of the financial system via this channel. Within the asset management sector, risks remain largely manageable, but certain vulnerabilities are increasing. Liquidity risks can materialize during unexpected market movements or sudden outflows, particularly for funds with limited tradability of underlying assets. Market stress can be amplified when asset managers are forced to sell quickly due to margin calls or redemptions. Adequate liquidity risk management, including stress tests and liquidity management tools (LMTs), is therefore essential. With AIFMD II, the European framework has been tightened, emphasizing an integrated approach where fund design, exit conditions, and LMT policy are coherent. Furthermore, the private credit and private equity markets have grown in recent years. Due to limited transparency and higher risks regarding illiquidity and valuations, this requires extra attention from supervisors.

Financial Stability Report 4 ANALYSIS REPORT For consumers, financial crime, inter alia due to the digitalization of fraud practices, is a structural risk. Criminals are operating in a more professional manner, resulting in large annual financial losses. This undermines confidence in the financial sector, puts pressure on operational processes, and broadly contributes to market uncertainty. Furthermore, risks remain from the housing market and mortgage debt. An expansion of lending standards is therefore undesirable. Finally, the financial risks of foundation damage for households are considerable, requiring a collective approach.

Financial Stability Report 5 ANALYSIS REPORT 2. General trends and risks 1 The data in the graphs runs, where possible, up to the end of April 2026. 2 ESRB (2026), Financial stability risks from geoeconomic fragmentation. 2.1 Geopolitical and macroeconomic developments The current risk landscape is characterized by escalating geopolitical tensions, higher inflation, weakening growth, and persistent uncertainty, which increases risks to financial stability. Europe and the Netherlands are relatively vulnerable, inter alia due to their dependence on energy imports, open trade structure, and for the Netherlands specifically: the presence of high-tech industries. Indicators for financial stability show deterioration. The global financial stress index (GFSI) rose during the increase in geopolitical tensions surrounding the conflict, but has since fallen back to the multi-year average (Figure 1).1 The geopolitical tensions are also accompanied by an increase in economic policy uncertainty, particularly from the United States. Over a longer period, markets currently seem to have difficulty pricing in this uncertainty (Figure 2), which aligns with international analyses showing that market reactions to geopolitical risks are often temporary.2 Compared to 2025, uncertainty regarding possible economic and financial outcomes has further increased, such as the development of growth and inflation and the probability of further market corrections. The risks are therefore clearly downside-oriented, and economic and financial development remains highly dependent on the further course of geopolitical tensions. Figure 1: Financial stress and geopolitical risks. 1-2025 4-2025 7-2025 10-2025 1-2026 4-2026 Index Index Financial stress Geopolitical risks (r-axis) -0,4 -0,2 0,0 0,2 0,4 0,6 0,8 1,0 1,2 0 50 100 150 200 250 300 350 400 Source: Bloomberg.

Financial Stability Report 6 ANALYSIS REPORT Figure 2: Economic policy uncertainty versus volatility. 2020 2021 2022 2023 2024 2025 2026 Index Index Economic policy uncertainty VIX (r-axis) 0 100 200 300 400 500 600 0 10 20 30 40 50 60 Source: Bloomberg. In spring 2026, the world economy has clearly deteriorated due to the escalation of the conflict in the Middle East, a sharp turnaround from the relatively favorable conditions in the second half of 2025. Military escalations, damage to energy infrastructure, and uncertainty regarding vital transport routes, particularly the Strait of Hormuz, have led to disruptions in energy supply, trade, and financial markets. According to the IMF, this is one of the largest energy-related shocks in recent decades. Outside energy markets, international supply chains are also disrupted, leading to higher costs, longer delivery times, and rising prices. This is visible in, among others, tanker rates and fertilizers (Figure 3), where fertilizer prices are highly dependent on the availability and throughput of raw materials via the Strait of Hormuz. Additionally, critical production factors for the semiconductor industry, such as helium, are coming under pressure due to disruptions in global logistics chains.

Financial Stability Report 7 ANALYSIS REPORT Figure 3: Price index for tanker rates and fertilizer. 1-2025 4-2025 7-2025 10-2025 1-2026 4-2026 Index Index 0 500 1000 1500 2000 2500 3000 3500 4000 0 150 300 450 600 750 900 1050 1200 Tanker Fertilizer (r-axis) Start of conflict Source: Bloomberg. The geopolitical shock leads worldwide to lower growth expectations and higher inflation expectations. Where international institutions at the beginning of 2026 still expected further strengthening of global growth momentum – with growth forecasts rising towards approximately 3.3-3.4% – the escalation of the conflict in the Middle East has clearly reversed this picture. Recent forecasts from the IMF and OECD now point to global growth of approximately 2.9-3.1% in 2026, with upward revisions of inflation to around 4% for the G20, driven by higher energy prices and disruptions in logistics and supply chains. In more adverse scenarios, global growth could fall further towards 2-2.5%, while inflation continues to rise.3 Energy-importing countries are hit harder than exporters, due to pressure on purchasing power, corporate profits, and domestic demand.4 This combination presents central banks with a policy dilemma: further monetary tightening to curb inflation could further slow economic growth, while a less restrictive policy increases the risk that inflation remains high for longer. This increases the chance of a stagflation scenario, with prolonged low growth and persistent inflationary pressure. Against this backdrop, economic development remains highly dependent on geopolitical developments and the extent to which uncertainty over energy prices, trade, and supply chains persists. Companies are postponing investments, and uncertainty over costs, prices, and availability of raw materials remains high. For Europe, recent forecasts from the IMF and ECB confirm the deteriorated macroeconomic picture. Eurozone growth is forecast at approximately 1.1% for 2026, with the energy shock and persistent uncertainty weighing on both consumption and investment. At the same time, inflation dynamics remain stubbornly persistent via energy and cost channels, strengthening the policy dilemma for central banks. For the Netherlands, forecasts from, among others, the CPB and the European Commission point to moderate growth of approximately 1.2-1.4% in 2026, slightly below earlier expectations. Due to the open trade structure and strong integration with international energy and goods flows, the global shock transmits relatively quickly into the Dutch economy. Disruptions in energy and trade chains weigh on exports, corporate profits, and investments, while uncertainty undermines confidence among companies and households. Combined with higher volatility on financial markets, this increases risks to financial stability from both a European and national perspective. Transmission channels to financial stability The combination of higher inflation expectations, weakening economic growth, and increasing geopolitical uncertainty transmits to financial stability via multiple channels. Via the real economy channel, rising costs and falling real incomes directly affect the financial health of companies and households. Particularly energy and raw material-intensive sectors are confronted with rapidly rising costs, while weakening demand puts margins under pressure, increasing the probability of payment problems and bankruptcies. Households also see their costs for energy and basic goods rise, leading to potential payment arrears. In an open economy like the Netherlands, where cost increases are relatively quickly passed on, this vulnerability can be particularly large. At the same time, speculation is increasing in the market regarding the sustainability of high government debts, particularly in the United States. Debt securities traditionally considered very safe, such as US Treasuries, are no longer completely free of doubt, which can contribute to higher volatility and disruptions in global bond markets. Furthermore, government policy responses to the energy crisis, including support measures, could pose risks to the sustainability of public finances in the long term. Financial markets seem to partially anticipate this: the yield on 10-year government bonds rose across the board in March and April, with a relatively stronger increase in countries with higher government debt as a percentage of GDP (Figure 4). Figure 4: Change in 10-year yield between 27 February and 30 April versus government debt as percentage of GDP (size based on total government debt in EUR, dark purple are European countries). 0 10 20 30 40 50 60 70 80 90 Basis points Government debt (% of GDP) 0 50 100 150 200 250 DK SE JP FR IT UK DE NL ES US Source: IMF and Bloomberg.

Financial Stability Report 9 ANALYSIS REPORT Via the financial market channel, geopolitical tensions lead to increased uncertainty and greater price fluctuations on financial markets. Since February 2026, expected volatility in equity, oil, interest rate, and currency markets has clearly increased and also recovered (Figure 5). This aligns with the analysis of the European Systemic Risk Board (ESRB) that geopolitical uncertainty often manifests in temporary volatility peaks, while underlying structural risks are not directly and fully incorporated into market prices.5 In such an environment, where uncertainty is high and information can change quickly, prices are often determined by short-term developments (myopic investor behavior). As a result, periods where risks are only limitedly priced in can be followed by 5 ESRB (2026), Financial stability risks from geoeconomic fragmentation. sudden and sharp market movements. For financial institutions, this increases the risk of rapid value declines, unexpected margin calls, and temporary liquidity pressure when market sentiment deteriorates. At the same time, the effectiveness and predictability of international crisis instruments by central banks, particularly the Fed, seem to have become less self-evident. Market participants are speculating about a less automatic deployment of international liquidity facilities, such as dollar swap lines, while within Europe there is debate over joint financing instruments. This can increase uncertainty regarding the availability of liquidity in stress situations and amplify market dynamics. Figure 5: Volatility indices. 1-2025 4-2025 7-2025 10-2025 1-2026 4-2026 Index Index 0 10 20 30 40 50 60 70 80 90 0 20 40 60 80 100 120 140 160 180 US Equities European Equities Gold Bitcoin Bonds (r-axis) Oil (r-axis) Source: Bloomberg.

Financial Stability Report 10 ANALYSIS REPORT In addition to economic and financial market dynamics, the operational-digital channel also forms an important transmission mechanism. Geopolitical tensions increase the likelihood of cyberattacks and disruptions to critical infrastructure6, while vulnerabilities in digital systems and dependencies on cloud services often only become visible during incidents. These dependencies are systematically mapped out within the DORA framework, but the financial sector remains highly exposed to, particularly American, service providers, meaning concentration risks remain relevant. For an open and highly digitalized financial sector like that in the Netherlands, this remains a fundamental source of vulnerabilities (see also paragraph 2.2). A reinforcing factor is the increasing intertwining of geopolitics and economic power tools. The World Economic Forum ranks geopolitical confrontation as one of the most likely global risks, where countries use dependencies in trade, finance, and technology as geopolitical instruments.7 For Europe and the Netherlands, this increases vulnerability, inter alia due to integration with the international dollar system and dependence on non-European financial and digital infrastructure. As a result, conditions for financing, trade, and access to technology can change more abruptly. The current period of heightened geopolitical and macroeconomic uncertainty shows that traditional risk models offer limited guidance in complex circumstances. Many relevant risks are not driven by known patterns, but by uncertainty, interdependencies, and low-probability, high-impact events. Developments in geopolitics, markets, technology, and human behavior can combine in unpredictable ways, with tensions building under the surface for some time before suddenly becoming visible. This requires financial institutions to look beyond historical data and 6 IMF (2024), Rising cyber threats pose serious concerns for financial stability. 7 World Economic Forum (2026), Global Risks Report 2026. 8 Moody’s (2026), Outlooks 2026: Artificial intelligence, digital finance, cyber risk, and data centers. standard scenarios in their risk management, create space for dissent, and explicitly address uncertainty. It is important not only to steer towards efficiency, but also to invest in governance, buffers, and adaptability, so that institutions are better prepared for abrupt and unexpected developments and the financial system remains resilient in an environment of structurally higher uncertainty. 2.2 Digitalization and operational risks Digitalization is developing at a rapid pace and increases both the efficiency and the vulnerability of the financial system. Financial institutions are modernizing their IT environments, migrating to the cloud, and integrating AI applications, which increases dependence on digital infrastructure. Strong concentration among a limited number of global cloud and AI service providers can grow into a critical bottleneck for the sector.8 Capacity shortages, rising costs, and differences in security levels can affect service continuity and limit strategic choices. Digitalization also takes place in a context of geopolitical fragmentation and varying levels of cyber resilience, placing higher demands on governance, risk management, and recovery capacity. Furthermore, tokenization can lead to shifts in customer behavior, where digital ecosystems of (neo)banks, payment institutions, and BigTech increase the risk that stable funding leaks away from traditional institutions, with implications for liquidity management and pricing. Cyber incidents in 2026 form one of the most prominent digital risks for the financial sector. The number of incidents has increased sharply, particularly at banks and securities firms, while the actual scale of fraud is likely underestimated due to underreporting. At the same time, the nature of attacks is changing: generative AI is making social engineering techniques more advanced and increasing the use of multi-channel attacks, such as voice spoofing and deepfakes. In a context of heightened geopolitical tensions, attacks are becoming faster, more complex, and less predictable. This increases the likelihood that incidents escalate into broader disruptions, particularly via shared vulnerabilities in cloud and data services. The rise of highly capable AI applications with cyber-offensive capabilities, such as Anthropic’s Mythos or OpenAI’s GPT5.4, further strengthens this development, as the scale, speed, and impact of attacks increase. This increases the risk of abrupt and non-linear effects, where operational disruptions can coincide with broader market and macroeconomic shocks. The rapid adoption of AI offers efficiency gains but also brings new operational and model risks. The emergence of so-called foundation models, which combine large amounts of financial and behavioral data, enables (international) platforms and payment service providers to build a strategic information advantage. This has implications for competitive dynamics, consumer protection, and the concentration of model and data risks. At the same time, the required AI infrastructure forms a bottleneck: the demand for computing power is growing faster than supply, creating dependence on a limited number of providers. This increases concentration risks and exposure to differences in risk and security profiles. Attackers are also increasingly using AI to personalize fraud and bypass security, inter alia via synthetic identities and automated phishing. This underscores the importance of robust governance, data quality, and model validation. The increasing dependence on digital third parties forms a structural operational risk. Due to concentration among a limited number of, mostly non-European, cloud, software, and AI service providers, disruptions at one provider can simultaneously impact multiple institutions. Geopolitical tensions exacerbate this vulnerability, as digital dependencies can also be used as leverage, for example via sanctions or abrupt service interruptions. Digitalization is thus developing into a channel through which disruptions can directly transmit 9 AFM and DNB (2025), Digital dependence in the financial sector. Risks, resilience, and European autonomy. 10 World Economic Forum (