rates. or as president lagarde put it1 : " we have faced the worst pandemic since the 1920s, the worst conflict in europe since the 1940s, and the worst energy shock since the 1970s ". these all were the kind of events that happen infrequently ; any one of them could have resulted in significant weaknesses in the banking system. but thanks to the work of my predecessors, the banking system proved resilient in the face of these threats. the robustness of the system is evident in the data : in 2015 the average ratio of nonperforming loans ( npls ) for significant banks in the banking union was 7. 5 %, at a time when some banking systems had ratios nearing 50 %. by the end of the second quarter of this year, it had decreased to 2. 3 %, driven mainly by the reduction of npls in highnpl banks. likewise, the common equity tier 1 ratio for significant banks has improved, rising from 12. 7 % in 2015 to 15. 8 % today. bank profitability has increased considerably in recent quarters, benefiting from higher interest rates, and return on equity now stands at 10. 1 %. this resilience is also a result of the strengthened supervisory and regulatory framework after the global financial crisis, including the creation of european banking supervision. the limited repercussions from the banking sector turmoil of march 2023 are also testament to the robustness of our banking union. in the meantime, the environment in which banks operate has substantially changed, becoming more complex because of a range of exogenous shocks and structural shifts in the financial services landscape. novel risks are intensifying, such as those stemming from macro - financial and geopolitical shocks, digitalisation and climate change, which have increased the overall level of uncertainty. when considering the competitiveness of the european banking sector, i am aware that we are living through a technological renaissance. the rapid pace of change presents both opportunities and challenges, and without proper investment, the threat to competitiveness will undoubtedly become a reality. it is against this background that we reviewed our supervisory review and evaluation process ( srep ) to ensure that we can continue to deliver effective supervision to promote banks'resilience. one of the cornerstones of this reform project is to further improve the way we use qualitative measures to make them enforceable and legally binding. in my view, good supervision is characterised not only by a robust framework,

treatment, we need to understand the broader structural trends shaping our economies and societies to supervise with the highest degree of effectiveness. while we may not be medical doctors saving people's lives, our mission as banking supervisors – protecting people's life savings – is also important. so, i think it is useful to draw from the medical field, in particular from the discipline of optometry, for some lessons about how we can save people's economic lives most effectively. after all, in today's complicated world, reducing opacity helps us discern risk in a more clearsighted manner. opticians distinguish between central vision, fringe vision and peripheral vision. peripheral vision is the ability to detect what occurs outside our direct line of sight, beyond 60 degrees. it encompasses everything that can be seen on the sidelines and provides spatial awareness, helping with navigation and balance. improving peripheral vision is crucial for athletes as it enhances reaction times, improves anticipation and 3 / 6 bis - central bankers'speeches reduces the risk of injury. in banking, the periphery of our gaze captures the structural transformations of our societies and economies. think of the acceleration of technological progress, including the emergence of generative artificial intelligence and the impact of social media on depositor behaviour ; the reconfiguration of the financial value chain ; and the new competitors in the market or the growing share of non - bank financial institutions. while non - banks may help in financing the significant costs of the twin green and digital transition, they also need to be adequately regulated and closely monitored. growth in the nbfi sector, globally and in the euro area, is staggering. the global sector expanded from €87 trillion in 2008 to €200 trillion in 2022, an even larger increase than in the euro area sector which has more than doubled in size, from €15 trillion in 2008 to €32 trillion in 2024. the private credit market is a particular concern. it accounts for €1. 6 trillion of the global market and has also seen significant growth recently. growth in the european private credit market has accelerated by 29 % over the past three years, but the market in europe is still much smaller than it is in the united states, which is where investors and asset managers are often based. why is this a concern? certainly, growth of the market alone is not the main worry. first, the end investors are pension funds, sovereign wealth funds and insurance firms, but banks play a significant role in lever