European wildfires and climate crisis jeopardize financial stability

A record heatwave and prolonged drought have turned large parts of Europe into a tinderbox, with massive wildfires raging across France, Spain, Greece, Turkey, Portugal and the Balkans. The blazes have destroyed homes and infrastructure, forced hundreds of thousands to evacuate and caused several fatalities, including three firefighters in Greece.

Experts warn that the climate‑driven surge in natural disasters poses systemic risks to the banking sector. "These services are no longer stable, they are in rapid decline," said Mr. Elderson, a senior official of the European Central Bank (ECB). The ECB has launched an extensive assessment programme to map how ecosystem damage could affect credit risk, inflation and long‑term financial stability.

Firefighters on the ground describe the unprecedented speed and intensity of the flames. "It's not a usual fire. It moves at unprecedented speed," said fire commander Mathe Zomen in western France. Business owners, such as Carlos Brabo, who witnessed his bar in the outskirts of Madrid engulfed, echo the growing concern that climate‑related losses are now a core economic issue rather than a peripheral environmental one.