On 24 November 2015, the European Commission published a proposal for a European Deposit Insurance Scheme (EDIS). The proposal concerned the creation of a European system of deposit insurance supported by a European fund and managed by the Single Resolution Board (SRB). One issue frequently raised in connection with this concerns how much various different banks should contribute to such an EDIS. In particular, one of the questions asked is whether, in order to reduce the reporting burden, smaller banks should make a lump-sum, rather than a riskbased, contribution. Another question is whether large banks, which are more likely to go into resolution than insolvency, should be charged a lower percentage of their covered deposits in contributions to the deposit insurance fund, given that these banks already contribute more to the Single Resolution Fund (SRF) and are less likely to need assistance from the EDIS. Concerns about exchange-traded funds (ETFs) amplifying potential stress in financial markets have resurfaced recently in view of the rapid growth of the industry. Over the past decade, the market for exchangetraded funds has grown to more than €3 trillion of assets under management globally, of which almost €550 billion is accounted for by ETFs domiciled in the euro area. The growth of the sector has been accompanied by a more general increase in the role of passive investment strategies. This box reviews the main features of the ETF market in the euro area and discusses some potential financial stability risks associated with an expanded role for this asset class in the euro area financial landscape. Non-bank lending to households is increasing. In the euro area, the share of non-banks in longterm lending to households grew from 4.2% in 2010 to 5.4% in 2016. Behind this overall increase are large differences between countries, both in terms of the share of non-bank lending and in terms of its growth since 2010. In most countries, the provision of long-term loans to households is still dominated by banks. In the Netherlands, where insurance companies have long since played a role in mortgage lending, non-banks provide a relatively large share of these loans. Based on joint analysis with De Nederlandsche Bank (DNB), this box describes the shift towards non-bank lending in the Dutch mortgage market and discusses the implications for financial stability and macroprudential policy. One standard market-based indicator of systemic risk regularly presented in the Financial Stability Review is the probability of default of two or more banking groups in the euro area.50 Recently, a number of alternative methodologies have become available which measure similar market-based banking stress probabilities. The main aim of this box is to cross-check the information content of these alternative measures with the ECB’s core indicator. For some time, the prospect of continuing low profitability of euro area banks has been highlighted in the FSR as a key risk for financial stability. This risk remains a cause for concern, as both cyclical and structural factors continue to weigh on banks’ ability to generate sustainable profits. In monitoring this risk, the ECB and other institutions make regular use of bank analysts’ earnings forecasts. Looking at data for euro area banks, this box evaluates the accuracy of those forecasts. This box analyses the factors underlying the renewed increases in TARGET2 balances and concludes that they do not reflect capital flight from certain euro area countries in a context of generalised mistrust of the respective banking sectors. The increase in TARGET2 balances since March 2015 largely mirrors the cross-border payments resulting from the injection of liquidity via the APP. Owing to the integrated financial structure in the euro area, securities purchased under the APP are often purchased from counterparties located outside of the jurisdiction of the purchasing central bank. When payments for the securities purchased are made across borders, TARGET2 balances are affected. A significant number of large APP counterparties are domiciled in financial centres located in a few countries. Moreover, non-euro area counterparties, from which around half of purchases by volume have been made, access the TARGET2 payment system mainly via Germany and therefore receive payment for the securities sold to the APP in that jurisdiction. The outcome is that payments for securities purchased under the APP result in sizeable increases in TARGET2 balances. Heterogeneous regional developments in housing markets may be a cause for concern from a financial stability perspective. Although diverging developments at the regional level could be justified by fundamentals, such as differences in regional income, employment, population dynamics and amenities, they could also signal excessive exuberance of house prices in certain areas, for example due to the strong presence of foreign buyers. In this case, regional developments may spill over to adjacent locations or the entire country via "ripple effects", with regional price developments potentially ending up leading the housing cycle at the country level.