Credit risks in some sectors -- notably commercial real estate -- requires vigilance from supervisors, European Banking Authority Chairman Jose Manuel Campa told a European Parliament Committee Monday.

Despite some difficulties, higher rates had so far proved beneficial for European banks, but risks and challenges lay ahead, Campa added. The latest central bank rate rise cycle had been unprecedented in terms of speed and steepness and the banking sector needed to be prepared for further passthrough of higher rates, he said.

Campa said that the passthrough of higher rates to economic agents had been “asymmetric” across the EU, but the result of high interest rates "will eventually lead to some credit quality deterioration particularly in some of those corporates and households that have been more leveraged so we need to be prudent in this high interest rate environment".

On Wednesday, MNI hosts IMF Financial Counsellor & Director, Monetary and Capital Markets Department head Tobias Adrian to discuss the Washington-based institution's latest financial stability report. Registrations for the talk are open: (INVITE: MNI Webcast with IMF's Tobias Adrian On Oct 25)