market downturns in both dimensions. the swift increase in interest rates since 2022 has been a regime shift for financial and non - financial actors alike. the pass - through of higher interest rates to the economy has undoubtedly had an impact on the real estate market and on financial stability. but the magnitude and speed of its impact differed across countries depending on a range of 1 / 3 bis - central bankers'speeches factors, including the structural features of housing financing, such as the importance of fixed vs variable rates or mortgage duration. another important factor has been the level of debt of non - financial actors. this new environment has raised several questions for the conduct of macroprudential policy. as monetary policy has been restrictive on purpose to preserve price stability, should macroprudential tools be relaxed in the face of the real estate market downturn? faced with this dilemma, the report provides us with food for thought : one of its main lessons for macroprudential policy - makers is to recommend prioritization of tools that meet objectives without adjustment. in particular, if we aim at maintaining resilience, tools which act as guardrails appear especially helpful in a context when financial stability risks have increased. on this, i look forward to hearing the views of the panelists that will discuss the structural vs cyclical use of macroprudential policy but we will also get useful insights from the panel on current financial stability challenges in housing markets and the distribution of risks. 2. how to articulate? the challenge of the interaction with other policies the second interaction challenge that i will dwell on today is the following : " how to articulate macroprudential policy for housing risks with other policies? " we have to be humble : macroprudential policy can do a lot but cannot do everything, and this is especially true when it comes to housing, which has a multifaceted nature. and we have to be clear on the purpose of macroprudential policy, which is safeguarding financial stability – no more, no less. obviously macroprudential policies are a complement to the first line of defense for financial institutions which is sound management, incentivized by demanding regulation and effective supervision. in this regard in europe we have come a long way in institutional terms : i am proud that we are celebrating today the 10th anniversary of europe's single supervisory mechanism, which has proved to be a success. more broadly, the cgfs report emphasizes that successful mitigation

the subprime crisis starting in mid 2007, as were the banking systems in the other leading developed countries. this led to an extended period of strong turbulence. the impact of the crisis on banks ’ earnings first shows up in the third quarter financial statements and then more clearly in the fourth - quarter statements. french banks were affected through several channels : • first, through their direct exposures to american households in the subprime category or through indirect exposures in portfolios of structured financial instruments, such as residential mortgage backed securities ( rmbs ) and collateralised debt obligations ( cdos ) that are in turn exposed to subprime risks. as was the case for the rest of the banking system in europe, indirect exposures accounted for much greater amounts than direct exposures and therefore for the bulk of the losses ; the lessons that this situation holds for more refined risk management need to be learned quickly. • secondly, through exposures to securitisation vehicles ( conduits or structured investment vehicles ) and particularly through liquidity lines, which need to be managed more rigorously going forward. • thirdly, through exposures to assets taken back from securitisation vehicles, or even collective investment schemes, that ran into liquidity problems ; this type of reintermediation needs to be given more consideration in terms of capital requirements. • fourthly, through their exposures to monoline insurers, which insured some products and were themselves hard - hit by the crisis and thus epitomise “ wrong - way ” counterparty risks, which need to be assessed more carefully. • finally, though exposures to leveraged buy - outs, or more generally by credit - riskrelated costs on the most vulnerable companies, which are starting to rise. consequently, french banks have not escaped the overall slowdown in net banking income growth affecting major international banking groups. the net banking income of the three leading groups using ifrs grew by only 3. 8 per cent in 2007, after rising by 18 per cent in 2006. however, the aggregate net profit under french accounting standards for the french banking system in 2007 reached nearly €27 billion, making it possible to generate income that is used in part to strengthen the institutions ’ financial foundations, thereby contributing to the financial stability of the paris market. the diversification of french banking groups ’ activities has proven to be a strength. several business lines are showing positive trends, with further gains in retail banking, which posted growth of 9.