The European Central Bank’s 2011 biannual Financial Stability Review provides an assessment of the risks to financial stability which have emerged since June 2011, pointing in particular to an unprecedented loss of confidence in sovereign signatures. The Review identifies four main risks: (i) contagion between public finances, the financial sector and economic growth; (ii) funding strains in euro-area banks; (iii) weakening macroeconomic activity and credit risks for banks; and (iv) imbalances between key global economies. Related to financial regulation, the Review argues against maximum harmonisation of capital requirements, suggesting that for stability reasons, EU member states should be able to apply more stringent rules than the harmonised minimum standards in Capital Requirements Directive IV.