Many households were under increasing financial pressure when inflation surged and interest rates were raised in the first few years of the 2020s. Essential spending rose faster than household income, which placed a strain especially on indebted households. Nevertheless, households have, for the most part, coped well with their loan servicing, and resilience must continue to be maintained in the future.

Macroprudential policy has been used to protect against the systemic risks associated with a concentrated banking sector and high household indebtedness. There is scope for simplification in the regulation of the banking sector. There should also be greater consistency among EU countries in their use of macroprudential instruments.