This meant that incomes held up very well. The banking system also helped households and businesses to weather the crisis by providing payment holidays and working with their customers to recommence repayments as their situation permitted. Both of these factors were good for household cash flows. At the same time, consumption opportunities were curtailed, particularly for discretionary services.
10 Recent events have forced a re-evaluation of such models in the research community. It seems to me that the ECB’s approach has been vindicated by the financial crisis. The importance of monitoring money and credit developments is becoming more recognised in both the academic literature and the policy debate.