ECB warns eurozone faces shock from Fed tapering

The European Central Bank has warned QE tapering by the Federal Reserve may cause a significant market shock for the eurozone.

In its latest financial stability review, the Bank said the euro area must do more to prepare its financial system for when the Fed scales back its bond-buying programme. The ECB called for policymakers to ensure institutional investors were better prepared for a 'normalisation' of yields, as well as 'stable and predictable' macroeconomic policies from member states. According to the report, the risks of a fallout from tapering for the eurozone have increased since May, despite an overall market improvement. The ECB said: "Starting in May, there was a significant repricing in globa...