This being said, the decline in the large and complex banking groups core Tier 1 capital ratios under the adverse scenarios is found to be relatively mild, which is a sign of resilience among the largest euro area banks also reflecting significant capital raising efforts in recent years.
In contrast, in a case where there is a positive shock to the economy and inflation expectations rise, if the Bank conducts an operation to constrain a rise in nominal long-term interest rates, such rates in real terms would decline in turn, thereby possibly producing an excessive stimulus to economic activity.