I will illustrate this using takeaways from the two supervisory exercises conducted by the ECB in 2022: a climate stress test and thematic review of C&E risks. Jointly, these exercises gave us a full picture of how banks are performing relative to our supervisory expectations. On aggregate the results are mixed.
As the central bank has been struggling with the problem of malfunctioning of the transmission mechanism, the fiscal authorities have also been struggling with the problem that fiscal expenditure has not led to vigorous spending by the private sector. B.