The passage of time will also help to narrow the remaining range of uncertainty somewhat, although the deterioration in global economic conditions since PCAR2011 and waves of increased market uncertainty in the euro area and worldwide continue to present challenges to accurate loan-loss forecasting.
Furthermore, the continuing dislocation – to date – in the transmission of monetary policy throughout the euro area presents banks in stressed countries like Ireland with profitability challenges, especially in respect of tracker mortgages (whose running yield is tied to the ECB policy rate).