The good news is that one year after my first speech on the state of C&E risk management in the euro area banking sector, most banks have started to adapt their practices to incorporate C&E risks into their daily business. In early 2021 banks deemed that 90% of their practices were only partially or not at all aligned with our supervisory expectations.
In addition to keeping close tabs on measures of labor costs, I have found it valuable to use some high-frequency indicators of services spending, particularly in the leisure & hospitality and travel sectors (figure 7).