Against the backdrop of much tighter management and supervision of this so-called interest rate risk in the banking book on this side of the Atlantic, similar banking failures have not manifested itself in the euro area. At the same time, I regard debt sustainability, in the broad sense, as one of the major financial stability risks on either side of the Atlantic.
Low long-term interest rates have weighed on profitability in the financial sector, although firms have so far coped with those pressures. As shown in the next slide, net interest margins (NIMs) for most banks have held up surprisingly well. NIMs have moved down for the largest banks. Return on assets, shown to the right for both groups, has recovered but remains below pre-crisis levels.