This is needed to avoid a situation whereby a country or a region, for instance after experiencing a specific event or asymmetric shock, enters either into a period of protracted low growth and higher unemployment, or into a long period of overheating. There are many factors that can improve the resilience of the euro area economies to adverse shocks.
Potential measures include improving the transparency of securities (as with ABCP), standardizing terms such as through-the-cycle haircuts for repos, and exploring the potential use of clearing houses to limit counterparty risks. Regulations and standards could reinforce these initiatives. Central bank operations could also be adapted to create a market-maker of last resort.