). for the euro area as a whole, the share of short - term and floating - rate loans in the stock of loans is much higher for firms than for households. this means that outstanding debt is repriced faster for firms than for households. besides the tightening in financing conditions in terms of cost, the credit standards for new loans to the nonfinancial private sector also tightened across the board during the first half of 2022, according to the july bank lending survey ( bls ). 6 this is attributable to banks ’ heightened risk perception and lower risk tolerance. in july banks expected a further contraction in credit supply for the third quarter. so what can we expect for the financial system in 2023? as i have already noted, under the current circumstances, making any projection is a very challenging task. the key factors in play are the economic outlook and the rise in interest rates. the performance of the financial system in 2023 will be shaped by how these factors interact. on the one hand, the european banking system is currently in a strong position. we have also observed robust profitability in h1 2022, taking advantage of higher interest rates, especially in q2, resulting in a 5 % increase in net interest income, the highest quarterly increase in recent years. spreads of non - financial corporations increased by 14 bp in h1 2022, compared to 4 bp for households, due to more issuances and faster repricing. although profitability has increased, 7 roe remains heterogeneous across business models and countries. investment banks and corporate / wholesale lenders lag behind other business models. the biggest improvements were recorded for diversified lenders. moreover, although we have not yet observed any significant increase in deposit rates, it is clear that we will soon begin to see an increase in deposit remuneration. this will also have an impact on margins. https : / / www. ecb. europa. eu / stats / ecb _ surveys / bank _ lending _ survey / html / ecb. blssurvey2022q2 ~ ce6d1a4597. en. html # toc5 only one business model ( small market lender ) has seen a fall in profitability, although it remains the most profitable model. meanwhile, although impairment flows are still low, we expect this trend to change as the economy slows down and disposable household income falls due to inflation. a combination of

teaching economics in a pre - crisis world i have been thinking about the links between the real economy and finance for many years now, starting with my career as a professor in the late 1990s, when i taught macroeconomics to mba students. one of the most striking features of a business school environment is the palpable energy of the students, their keen interest to learn, their drive and ambition. that made teaching challenging, interesting and rewarding. but all this genuine interest and energy was not automatically granted to a core macroeconomic course. we need to remember the mood of the time. buzzwords like : “ new economy, ” “ dot com, ” “ great moderation, ” were on everyone ’ s lips. questions like “ is the business cycle dead? ” were seriously being asked and the dow 36, 000 was seen by some as the likely next frontier. many students wanted to pursue a career in finance. in such an environment, where macroeconomic stability was taken as a permanent feature of the economy, students asked why they should “ waste time and money ” sitting through a core macroeconomics class. why not jump immediately to the important stuff – finance? we even changed the name of the course to make it more appealing : “ macroeconomics ” became “ the global economic environment. ” i don ’ t know that this was very effective … to be fair to my former students, at the turn of the century, they weren ’ t the only ones to downplay the links between finance and the macroeconomy. professionals and academics alike shared this view. i noticed a big change in attitude, however, when i last taught this course in the summer of 2009. students took for granted that the connections between the economy and finance were crucial. there is an obvious explanation for this new - found awareness. between the first and last time i taught this course, the world experienced its worst financial crisis since the 1930s, with real, dramatic consequences on people throughout the world. in the g - 7, excluding canada, gdp fell by 5. 6 per cent from the peak in 2008 to the trough in 2009, and almost 12 million jobs were lost. the united states alone shed almost 9 million jobs, and even today, fewer than 15 per cent of those have been regained. in canada, things were better, thanks to a financial system that has held up remarkably well and buffered us from the worst of the financial storm. nevertheless, in canada, real gdp fell by more