The external sector remains a pillar of strength for the economy given the recorded surpluses in the balance of payments (BOP), along with a lower current account deficit in the first three quarters of 2019. The BOP position made a turnaround—from a deficit of $ 2.3 billion in 2018, to a surplus of $ billion in 2019.
This is what happened during the crisis, when cross-border capital flows dried up suddenly. The euro area saw itself confronted with financial instability and fragmentation2, which severely challenged the single monetary policy. Overall, the crisis has led to a profound re-thinking of the financial system. Sound financial integration relies on a welldesigned institutional framework, in particular a regulatory regime reducing the pro-cyclicality of banks.