FRANKFURT: The euro zone's financial system is coping well with the war in Ukraine and the associated Western sanctions on Russia, European Central Bank Vice President Luis de Guindos said on Wednesday.

"For the euro area, the financial stability impact of the war has so far been relatively contained," de Guindos told a conference.

"Markets have generally been functioning well."

ECB expects to hike rates after ending bond buys in Q3: Schnabel

"While both banks and non-banks have been affected – especially the few that have large direct exposures to Russia and Ukraine – the economic fallout has not had a sizeable impact on the EU banking or financial systems as a whole," he added.