Although customer deposits still constitute the largest part of banks funding base, their share as a percentage of total assets of the euro area banking sector has been declining. This is shown in Chart A.
In the last ten years the access to market-based funding and wholesale deposits have allowed banks to raise large amounts of funding at relatively low costs in order to finance the provision of new loans. To the extent that more stable retail deposit financing has been replaced by short-term wholesale funding, banks may have become more exposed to interest rate and liquidity risks.