Since we cannot measure risk or define resilience, how are we to distribute competence between the national level and the currency area level, or even the EU as a whole? Currently, country-specific features of financial cycles certainly exist due to national financial systems and institutional, legal and fiscal frameworks.
So far, many banks have been able to more than offset declining interest revenues with higher lending volumes, lower interest expenses, lower risk provisioning and capital gains. Last year, for example, euro area banks’ aggregate net interest income increased, especially as crisis-hit banks refinanced expiring high-yield liabilities.