##u. 4 conclusion as this parliamentary term comes to an end and a new one begins in a few months'time, let me reiterate that the ecb is counting on this parliament to support these efforts with ambition and commitment. thank you for your attention. i now stand ready to answer your questions. ecb annual report 2023. 2 feedback on the input provided by the european parliament as part of its resolution on the ecb annual report 2022. this feedback statement provides responses to the issues raised and requests made by the european parliament in its resolution on the previous year's ecb annual report. the statement, which is structured by topic, serves to better explain the ecb's policies and promote dialogue with the european parliament 3 / 4 bis - central bankers'speeches and the public regarding the important issues highlighted by the members of the european parliament. the ecb has been publishing such feedback statements since 2016 following a suggestion by the european parliament. 3 ecb ( 2024 ), ecb announces changes to the operational framework for implementing monetary policy, press release, 13 march. 4 ecb ( 2024 ), statement by the ecb governing council on advancing the capital markets union, press release, 7 march 2024. 4 / 4 bis - central bankers'speeches

necessary. the importance of a resilient financial system let me now turn to our assessment of the financial sector. during my last appearance before this committee, we discussed the importance of maintaining a resilient financial system following the banking sector turmoil in the united states and switzerland. since then, the euro area financial system has remained strong, aided by declining inflation. confidence in euro area banks has benefited from strong rules and supervision. banks have maintained sizeable liquidity and capital buffers, and non - 2 / 4 bis - central bankers'speeches performing loan ratios remain close to historically low levels. at the same time, firms and households have shown resilience in the face of rising debt servicing costs resulting from higher interest rates. however, this positive outlook for financial stability in the euro area should not be taken for granted. it could face significant challenges if growth prospects weakened, inflation stayed above target for a longer period or further geopolitical risks materialised. we are also closely monitoring developments in euro area real estate markets as tighter financing costs, a move towards hybrid working practices as well as environmental, social and governance requirements are likely to continue to put pressure on this market segment. although mild signs of asset quality deterioration are becoming visible in commercial real estate ( cre ) lending, risks to this asset class are broadly contained given that banks'cre exposures, standing at around 5 % of total assets, are limited. our financial stability review, which is due to be published midmay, will provide more details of our assessment on this. to support continued financial sector resilience, legislators still have a lot of work to do in the coming years to close the gaps in our banking union. besides urgent reform of the bank crisis management and deposit insurance framework, we must set up a european framework for liquidity in resolution and, most importantly, a fully - fledged european deposit insurance scheme. we also need a solid institutional and policy framework for the non - bank financial sector and we welcome the european commission's forthcoming macroprudential framework review. moreover, during the next eu institutional cycle, the level of ambition and commitment devoted to the capital markets union ( cmu ) agenda must finally match the urgent need to make progress. completing cmu is key to strengthening resilience, enhancing eu competitiveness, growing our economy and achieving the eu's policy objectives, such as funding the green and digital transitions. in this spirit, the ecb governing council recently published a statement on advancing cm