Households are less able to tap their home equity to deal with economic shocks, fund their children’s education, or start new businesses. For some households, the collapse in house prices has left them underwater on their mortgages, and thus less able to refinance or sell their homes.
In the end, tackling NPLs requires a joint effort by banks, supervisors and legislators. To sum up, there are still things we can do to reduce risks in the euro area. In doing so, we will grow closer together, and that in turn will help to reduce risks further; European banking supervision is a prime example of this.