After September, on the basis of its current assessment, the Governing Council expects that a gradual but sustained series of additional interest rate rises will be appropriate. Lastly, the reduction in the size of the Eurosystem's balance sheet will only be achieved at a later stage, probably when the need not only for normalisation but also for a tightening of monetary policy becomes apparent. As part of this gradual normalisation process, the ECB Governing Council has made it clear that it will not rule out any options, including acting against fragmentation within the euro area, and will maintain a gradual and flexible approach to conducting monetary policy. 2. Macro financial risks and outlook In this context marked by the rise in external shocks, strong uncertainty about the extent of their impact and their duration, and a change in the interest rate environment with the prospect of very low or even negative rates over a long period coming to an end, we can collectively rejoice in the fact that for more than two years the banking sector has been resilient; it has contributed to 2  mitigating shocks and not to amplifying them. This shock absorption capacity is an asset that must be maintained and even strengthened. This can be done through two channels: supervision and regulation. The macroeconomic risks and outlook in particular confirm the need to keep the monitoring of banks' credit and market risks high on the supervisory agenda of the ACPR and the Single Supervisory Mechanism (SSM).
In this respect, the High Council for Financial Stability turned its recommendation for a debt service to income ratio cap of 35% and a maturity limit of 25 years on new housing loans into a legally binding standard from 1 January 2022, while maintaining the flexibility margin for 20% of quarterly new loan issuance. This measure aims at preventing excessive household debt in a context where housing loan issuance remains strong, while preserving the French model for financing home ownership. In conjunction with the predominance - which borders on exclusivity - of fixed-rate loans in France, it has strengthened households’ financial resilience in the face of the prospect of rising interest rates. Attention paid to the solvency of non-financial players also takes the form of the standard, adopted in May 2018 and extended until 2023, limiting the exposure of systemically important banks to the most indebted large companies residing in France to 5% of their capital. Finally, strengthening financial stability in Europe requires completing the Banking Union. The approach put forward by the President of the Eurogroup last May consists of a stepwise approach across four main workstreams (banking crisis management, depositor protection, diversification of sovereign exposures and provision of banking services within the single market). This stepwise approach is based on trust and realism. We view this as an asset for securing the political agreement that is needed to move towards a more comprehensive and resilient banking union, but which remains dynamic and innovative. 3.