Low vaccination rates in some parts of the world are a future risk to financial stability, the European Central Bank said in a report on Wednesday, while the recovery from the pandemic has eased pressure on the economy.

The economic rebound from the coronavirus in the eurozone had “reduced many of our worst fears about economic scarring,” ECB vice-president Luis de Guindos said in a statement.

But the “risks stemming from the pandemic have not disappeared entirely, not least because vaccination progress has remained slow in many areas of the world,” de Guindos said in the foreword to the ECB’s Financial Stability Review.

Widespread vaccination in Europe, where 64.9 per cent of the population has received two doses of the vaccine, had also reduced the continent’s exposure to more shocks from the virus into 2022.

Yet uncertainty about the future course of the pandemic and the limits it might place on economic activity meant it remained “one of the main risks to economic growth”, the report said. 

At the same time, global supply bottlenecks and a sharp rise in energy prices on the continent had created new stresses for firms, producing a more sustained rise in prices that could “weigh on the economic recovery”, according to the report.

The ECB also noted the risk of “pockets of exuberance” in credit, asset and housing, making the markets vulnerable to a correction, and the “high debt levels in the corporate and public sectors as a legacy of the pandemic”.

The ECB also noted the risk of ‘pockets of exuberance’ in credit, asset and housing, making the markets vulnerable to a correction

After the conclusion of the COP climate conference last week, where countries agreed to a watered-down promise to “phasedown” the use of coal, the ECB report said “timely, concerted action” on climate change would limit risks for the financial system.