Let me quickly remind everyone about the purpose of the FSR—to identify key vulnerabilities in the financial system, which can interact with and magnify economic shocks. We monitor the evolution of these vulnerabilities, and then apply a set of risk scenarios to look at the potential implications for the financial system and economy if a significant shock were to occur.
The main vulnerabilities that we see today are the same as those in the last FSR in November. I will begin with a few words about two of these: elevated household debt and imbalances in housing markets. These vulnerabilities are expected to persist for some time, although we have seen continued signs of easing.