Lower credit risks and the improvement in capital and liquidity positions have also been driven by the rollout of macroprudential policy frameworks and the supervisory policies of the Single Supervisory Mechanism. 30. Of course, it is essential for central banks to continuously monitor financial stability risks, especially in the context of a significant monetary policy tightening cycle. 31.
It should be noted that in the context of the March 2023 market turmoil, the share of bond holdings in the asset portfolios of euro area banks is much lower than those of US banks, and the differing regulatory environment makes interest rate risk for banks more moderate on average. 32.