While the medium term is uncertain, what we have seen to date globally is the pandemic highlighted pre-existing vulnerabilities, including rising corporate debt, fragility in non-banks, increasing sovereign debt, and declining pro tability in some banking systems.
Across the euro area and domestically, government action has alleviated immediate corporate liquidity constraints and contained insolvencies during the acute phase of the crisis.4 Alongside our accommodative monetary policy, the measures have helped to maintain favourable nancing conditions for households and rms. So, in the context of this macro- nancial shock, how has the nancial system fared?