That’s when we intervened. With quantitative easing, the financial situation in the euro area has become more favourable: banks have resumed lending. So it’s fair to say that it’s working. And that was unanimously acknowledged by the ECB’s Governing Council this month. In countries such as Spain and Italy in particular, financial conditions have improved.
Frontloading banking sector repairs in this way should in turn facilitate the Schumpeterian process of creative destruction in the economy at large – and not only by helping credit flow to younger firms, but also by facilitating debt resolution for older ones. Firms that no longer have a viable business model should go into insolvency.