of international trade and is directly exposed to the uncertainty brexit is causing. both actual and projected inflation rates have held persistently below the ecb ’ s objective. against this backdrop, the ecb governing council has underscored its determination to act if the medium - term inflation outlook remains below - target, adjusting all its instruments appropriately. in parallel, improving the workings of the euro area before any future crisis should occur is a pressing concern. to achieve this, progress without delay is needed towards greater financial integration with, namely : the development of a capital markets union ; the completion of the banking union with the creation of a common deposit insurance scheme ; 15 / 16 the introduction of fiscal instruments that improve the whole of the euro area ’ s economic stabilisation capacity ; and the creation of a common safe asset. we must also achieve healthy fiscal positions at the national level. these can enable budgetary policy to fully develop its stabilising role, resolutely tackle population ageing and address the structural shortcomings hampering productivity and the generation and harnessing of investment opportunities in the euro area. lastly, macroprudential policies should be adopted when risks to financial stability are perceived and so buffers may be built up that can be used ahead of more adverse macroeconomic situations. thank you. 16 / 16

, which serves as an indicator for credit market imbalances and the potential activation of macroprudential measures, continued to correct in 2021 following the rise recorded at the onset of the pandemic, but remains wide. credit intensity and the debt service ratio, both of which are complementary indicators, stand at moderate levels. in the housing market, the volume of new residential mortgage lending rose significantly in 2021, standing at the highest levels since 2010. however, given the sizeable volume of repayments, the stock of this credit grew by just 1. 2 %. the stock of loans to construction and real estate development held on its downward trend, albeit at a progressively slower pace. the indicators of real estate market imbalances have remained at positive values since 2020, albeit very close to the equilibrium level. meanwhile, there was no substantial change in credit standards for new residential mortgages in 2021, 21 although the average interest rate spread for fixed - rate mortgages narrowed to its lowest level in recent years. overall, close monitoring of this market is required, as it could be impacted in opposite directions by the war, given the real erosion of agents ’ income by higher inflation and the possible tightening of financing conditions, but also because it is a safe haven in the face of financial asset price corrections in a context of real interest rates holding at negative values. in the banking sector, non - performing lending to the resident private sector fell by 5. 4 % in 2021, to €49. 3 billion, confirming the variable ’ s singular performance during this crisis, underpinned by the economic policy measures. despite this encouraging performance, there is potential latent impairment in some credit portfolios, particularly those linked to the most vulnerable segments of firms and households. loans with significant increase in credit risk since initial recognition ( stage 2 loans ) continued to grow at high rates in late 2021 ( by 14 % year - on - year ) and accounted for 8 % of total credit, up 2. 2 pp on pre - pandemic levels. forborne loans also rose by 14 %, owing to the sharp growth in the non - financial corporate sector and among sole proprietors. at end - 2021 they represented 5 % of total outstanding loans, the same percentage as prior to the pandemic. vulnerability is highest among the sectors sensitive to the effects of the pandemic and to the rising energy costs. in particular, the combined share of npls and stage 2 loans in the sectors most severely affected by