The ECB is aware of these risks, and has already mitigated them through a number of specific measures, such as the prohibition of some types of close link, the raising of the rating threshold for ABS, an increase in valuation haircuts and the phasing-out of multi-layer securitisations.
It is generally accepted that a healthy, well-functioning financial sector is essential for growth. It is also the case that when the banking sector becomes dysfunctional and stops lending, the implications for the real economy can be extremely serious.