Turning to nearer neighbors, the governor broke down the key risks emanating from some euro area economies into, firstly, existing sovereign debt dynamics and, secondly, threats to the resilience of parts of the trading bloc's banking system.
Carney noted the vulnerability of elevated sovereign debt levels to a leap in borrowing costs or diminished growth prospects on the back of either trade or political headwinds.
Moving even closer to home, the governor raised the looming specter of the U.K.'s impending departure from the European Union (EU), noting banks located domestically currently supply over half of the debt and equity issuance from continental firms and account for over 75 percent of foreign exchange and derivatives activity in the U.K.
Consequent fears of contagion were emphasized by Carney as he discussed the risk of a disruption in services provided to the European real economy spilling over to hit the U.K. economy through trade and financial links.
While clearly stating that the largest risks to U.K.financial stability are global in nature, the governor went on to acknowledge that a lack of clarity over how Brexit will unfold means many unknowns cloud the current outlook.
"It will take time to clarify the U.K.'s new relationships with the EU and the rest of the world. And the orderliness of the U.K. economy's adjustment to these changes will influence the risks to financial stability," Carney said.