Public investment, and supranational investment coming from the NGEU funds, can only account for a small portion of this amount. 9  Moreover, a fundamental, game-changing feature for a more integrated capital market would be the existence of significant pan-European safe assets. A common safe asset would most likely become a common benchmark, allowing the prices of equities and bonds across the euro area to reflect fundamental risk more clearly. It would facilitate the development and integration of capital and financial markets in the euro area, as flight-to-quality movements would no longer imply flight-to-core-countries movements. This would be particularly relevant in times of stress, when it would help mitigate the possibility of monetary policy transmission being hampered in a context of fragmented bond markets. In this sense, the experience with the issuances to finance the SURE and NGEU programmes can serve as the prototype for this safe asset. Although relatively small in size, they have been a success in terms of market appetite and have helped most Member States reduce costs because of the pooled financing (see slide 9). Final reflections  As I mentioned at the beginning of my address, the fiscal-monetary policy mix has passed the demanding test posed by the COVID-19 crisis, so far, with good marks. The ad hoc decisions taken by policymakers were adequate, and compensated for the lack of a complete euro area institutional architecture, enabling monetary and fiscal policies to do their job, without overburdening each other.
There was a reduction in Stage 2 loans in the same period, to stand at 7.2% in March, although this level remains above its pre-pandemic figure of 5.9%.11 Forborne exposures also dropped, to 4.1% of all lending to the resident private sector in March 2023, below their pre-pandemic level (5%), while foreclosed assets saw a 14.5% fall in 2022.12 As for credit backed by Spain’s Official Credit Institute (ICO), the proportion classified as Stage 2 shrank in the 12-months before March 2023 by 3.2 pp to 19.6%. However, nonperforming assets in this portfolio increased by 70% in 2022, lifting the NPL ratio to 8.2% (up by 4.1 pp on March 2022). The reduction in the size of this portfolio (14.9% yearon-year to March 2023) accounted for 1.2 pp of the increase in the NPL ratio. Profitability Return on assets (ROA) has continued to improve, up to 0.71% in March 2023,13 one of the highest levels in the last decade. Meanwhile, return on equity (ROE) stood at 11.3%, more than 400 bp over the level observed in 2019 and above the cost of equity. The improvement in profitability stems, mainly, from the growth in net interest income, which rose by 28.5% year-on-year,14 driven by the fact, as I mentioned earlier, that the increase in market interest rates has been passed through to loans more than to deposits. Conversely, impairment losses climbed by 38.8%, as a result of business abroad, as they rose by barely 1.7% in business in Spain.