Economists focused their attention to the linkage between the output gap and the inflation rate, while awareness toward financial imbalances was limited. Factors which could not be captured through movements in the price of goods and services fell through the cracks. Institutional changes to transfer the responsibility for financial regulation and supervision away from the central bank also accelerated this trend.
Up until then, the illusion had prevailed that the Eurosystem could conduct monetary policy simply treating the euro area as a single nation. The doubts voiced by some analysts about the logical consistency of such a model had been muted by the incontrovertible successes of a decade of single monetary policy.