Instead of better capitalised banks and stronger fiscal positions we would have been left with financial and economic meltdown. Today we are seeing some encouraging signs of tangible improvements in financial conditions. Spreads in sovereign and corporate debt markets have narrowed considerably.
Banks in stressed countries have seen the deposits placed with them by euro area non-banks increasing by about 200 billion euro since August 2012. TARGET2 balances – the large intra-central bank positions that had accumulated due to the malfunctioning of financial markets – of the national central banks in these countries have declined by about 250 billion euros or 25% since their peak.