Moreover, profitability is boosted by a greater flow of lending and lower loan loss provisions than would have occurred in the absence of accommodative monetary policy. Analysis by the ECB suggests that these effects tend to outweigh the impact on net interest income over the short term, but the picture varies depending on banks’ business models.8 In the broader context of generalised overcapacity and technological innovation, some banks will need to review their business models to bolster profitability. Other financial institutions also face challenges to their business models in this environment.9 In particular, institutions providing longer-term return guarantees – notably guaranteed-return life insurers – face a future of weak profitability unless they adapt their business models to a changing world. Macroprudential policy can help to boost the collective resilience of these institutions and enhance recovery and resolution frameworks. Systemic risks beyond banking Let me now turn to the ESRB’s focus on systemic risks beyond banking. As financial intermediation continues to shift from banks to non-banks, we need to adapt our policy framework. We need to identify migrating risks and develop tools to mitigate them.10 With this in mind, the ESRB published its first annual EU Shadow Banking Monitor in July. 11 The report identifies a number of areas that require close monitoring, including rising liquidity mismatches, especially among some bond funds. One measure of liquidity mismatch for openended funds is the share of non-liquid assets in total assets, which was 38% for bond funds in the fourth quarter of 2015, compared with 26% six years earlier.

(2016), “Assessing the implications of negative interest rates”, speech at the Yale Financial Crisis  Forum, Yale School of Management, July. 9 These challenges are set out in more detail in an ESRB report on the macroprudential issues arising from low  interest rates and structural change in the EU financial system. 10 European Systemic Risk Board (2016), “Macroprudential policy beyond banking: an ESRB strategy paper”, July. 11 European Systemic Risk Board (2016), “EU Shadow Banking Monitor”, July. The methodological background to  the ESRB’s EU Shadow Banking Monitor is described in: L. Grillet-Aubert, J. Haquin, C. Jackson, N. Killeen and C. Weistroffer (2016), “Assessing shadow banking – non-bank financial intermediation in Europe”, ESRB Occasional Paper no.10. 12 European Systemic Risk Board (2012), “Recommendation on money market funds”, December. Further  analysis of money market funds’ systemic importance is provided in J. Ansidei, E. Bengtsson, D. Frison and G. Ward (2012), “Money market funds in Europe and financial stability”, ESRB Occasional Paper no. 1. 13 Abad, J., I. Aldasoro, C. Aymanns, M. D’Errico, L. Fache Rousová, P. Hoffmann, S. Langfield, M. Neychev, and T.  Roukny (2016), “Shedding light on dark markets: First insights from the new EU-wide derivatives dataset”, ESRB Occasional Paper no. 11. 14 European Systemic Risk Board (2015), “Report on the efficiency of margining requirements to limit pro-cyclicality  and the need to define additional intervention capacity in this area”, July.