•  It leads to instability and costly crises. In a recent paper, Gennaioli et al. 1 illustrated the role that trust plays in banking by comparing finance to medicine. Banking, is a service like healthcare, in which “transactions” take place between two parties that differ in terms of information, knowledge and technical competence.
True, we at the Bundesbank know that we cannot, and do not wish to, permit ourselves any signs of laxity. But for the time being we do not think that the turning point for an upward interest rate adjustment lies with us. The Dutch success up to now has not been achieved overnight.