The stock of provisions in euro terms also fell in 2004 from the previous year. Beyond the short-term horizon, the overall low levels of provisioning flows could be questioned as a less benign credit environment could make the situation more difficult for banks.
Possible triggers for a deterioration include an unanticipated sharp rise in short and long-term interest rates, or an unexpected worsening in the macroeconomic environment. In contrast to the observed changes in provisioning flows as a share of total assets, however, the ratio of provisioning stocks to non-performing loans increased as shown by the chart on the right on slide 8.