the eba – are using the ongoing stress test to collect data on these portfolios. the prospect of higher funding costs also increases the downside risks to bank earnings. in early 2023, we saw bond issuance volumes picking up amid repayments of the amounts borrowed under the targeted longer - term refinancing operations and banks'efforts to increase or maintain buffers on their minimum requirements for own funds and 2 / 4 bis - central bankers'speeches eligible liabilities ( mrel ). but bond funding costs have also risen markedly since the start of 2022. a faster repricing of deposits, on the back of heightened competition, would increase funding pressures even further. while npls are at record lows, default rates on banks'corporate credit exposures started to increase in the second half of 2022 and early warning signals of future asset quality deterioration have become more pronounced. loans showing a significant increase in credit risk ( so - called " stage 2 " loans ) are on the rise, in particular for consumer and other non - mortgage household loans. within the corporate sector, concerns are mounting about the outlook for commercial real estate ( cre ) loans amid falling valuations and investor demand in cre markets. and while the energy crisis has abated, the risks for european firms from delaying the transition to climate neutrality are still high. finally, elevated vulnerabilities in non - bank financial institutions may spill over to euro area banks – given that they are strongly interconnected – exposing the banks to liquidity, asset price and credit risks. these links appear on both sides of banks'balance sheets and are stronger for large banks. the importance of preserving resilience so what does the current environment imply for macroprudential policy in the euro area? in view of prevailing uncertainties, macroprudential policy should focus on preserving resilience. first, existing macroprudential capital buffers that have been built up in recent years should not be released in the current environment. this is because banks'profitability improved considerably and, as i said earlier, their capital positions are not constraining the supply of bank credit. second, in the current uncertain environment, banks should remain prudent on their payouts to further support the resilience of the euro area banking system. increasing bank payouts should not be seen as a sign of strength. far from it. the best sign of banking system strength continues to be strong capital positions, which ensure sufficient

jean - claude trichet : interview in der spiegel interview with mr jean - claude trichet, president of the european central bank, in der spiegel, germany, conducted by messrs thomas tuma and christoph pauly on 13 may 2010 and published on 17 may 2010. * * * spiegel : mr trichet, how have you been sleeping these last few days? trichet : i always sleep well! spiegel : not had any nightmares? trichet : no. spiegel : nevertheless, the financial world has changed since the weekend before last. the countries of the euro area have put together a previously unimaginable rescue package with a value of over €700 billion in order to save reeling member states from default. even your institution has relented on a few of its firmest principles and now intends to purchase even poorly rated government bonds. trichet : no, we have not relented on our principles. price stability is our primary mandate and compass. that being said, it is clear that since september 2008 we have been facing the most difficult situation since the second world war – perhaps even since the first world war. we have experienced – and are experiencing – truly dramatic times. spiegel : that ’ s been evident from the way that you and others have been behaving over the last few days. trichet : at times like these, you have to keep your composure and analyse the situation as lucidly as possible. back in august 2007, we were the first major institution in the world to correctly judge what was happening on the capital markets with the start of the turbulence. and we reacted swiftly. spiegel : what exactly happened between thursday and sunday of the week before last, when europe ’ s heads of state and government launched the largest financial rescue package in the history of europe? trichet : on thursday afternoon and throughout friday we had a continuous deterioration of the situation in the financial markets, both in europe and, as a consequence, at the global level. on friday markets closed and number of important indicators, spreads on sovereign bonds in europe, cds spreads and the situation in the interbank market were signalling the spreading of severe tensions. i made those points to the heads of state and government on friday evening. that is what happened between thursday morning and friday evening. being permanently alert is of the essence when you have important responsibilities. spiegel : hedge funds and other speculative investors currently manage assets with