In this respect, the High Council for Financial Stability turned its recommendation for a debt service to income ratio cap of 35% and a maturity limit of 25 years on new housing loans into a legally binding standard from 1 January 2022, while maintaining the flexibility margin for 20% of quarterly new loan issuance. This measure aims at preventing excessive household debt in a context where housing loan issuance remains strong, while preserving the French model for financing home ownership. In conjunction with the predominance - which borders on exclusivity - of fixed-rate loans in France, it has strengthened households’ financial resilience in the face of the prospect of rising interest rates. Attention paid to the solvency of non-financial players also takes the form of the standard, adopted in May 2018 and extended until 2023, limiting the exposure of systemically important banks to the most indebted large companies residing in France to 5% of their capital. Finally, strengthening financial stability in Europe requires completing the Banking Union. The approach put forward by the President of the Eurogroup last May consists of a stepwise approach across four main workstreams (banking crisis management, depositor protection, diversification of sovereign exposures and provision of banking services within the single market). This stepwise approach is based on trust and realism. We view this as an asset for securing the political agreement that is needed to move towards a more comprehensive and resilient banking union, but which remains dynamic and innovative. 3.

The immediate impact of the war in Ukraine on financial stability has so far been adequately absorbed as the direct exposures of the financial sector to Russia were low. However, risks to banks and financial stability may materialise through second-round effects and indirect channels from pre-existing vulnerabilities, notably those associated with (i) sectors most dependent on energy commodities, (ii) the development of leveraged finance and (iii) exposure to cyber-attacks. In this respect, particular attention should be paid to potentially sharp revaluations of high risk asset prices. The same holds true for rising prices and volatility in commodity markets and the considerable increase in margin calls on derivatives, in particular for energy and agricultural products. These have already put pressure on the liquidity of commodity market participants. Very careful monitoring of credit and liquidity risks in the energy commodities sector is therefore required, in particular to ensure that any potential default (e.g. by a trader) remains contained and does not lead to systemic contagion. Our second instrument for maintaining and strengthening banks' shock absorption capacity, after supervision, is regulation. I would like once again to stress the importance of an effective, fair and final implementation of the Basel III Accord, in its final 2017 version. As I said it last year, quoting the Governor, and it is even more the case today in the light of the crises we are facing: the Basel III rules represent the best possible agreement to promote financial stability at the international level.