The flaws in the architecture and institutional framework supporting the establishment of the Economic and Monetary Union necessitate an urgent rethink of this model to ensure that the euro area is stable and resilient both to common and specific exogenous shocks and to risks of inconsistency among the policies of the various economies.
By the end of the eighties, the financial system was considerably stretched. The directed and concessional availability of bank credit with respect to certain sectors resulted not only in distorting the interest rate mechanism, but also adversely affected the viability and profitability of banks.