In fact, however, balance sheet policy had already played a significant role while interest rates were still well above their current low levels. In order to understand the logic of balance sheet policy it is necessary to look at the composition of the balance sheet and the components of the recent increases.
Progress in tackling legacy issues such as high levels of non-performing loans, which have fallen by 30% since 2014, and the framework for resolution, including the implementation of the minimum requirement for own funds and eligible liabilities, have also helped to increase buffers and reduce risk and thereby the scope for risk sharing.