Whether financial regulators would be capable of spotting such specific asset bubbles early, and then of acting in a timely enough way to address such bubbles is, in my view, unlikely. Liquidity regulation A second class of policies that addresses asset bubbles and their consequences is liquidity regulation. An example is the new Basel III liquidity coverage ratio.
To safeguard financial stability in the euro area in the future, it is therefore essential that macroprudential authorities, particularly central banks, are provided by European legislators with an expanded toolkit. Let me conclude. Financial stability in the euro area has improved, accompanying the ongoing economic recovery. Compared to last year, the euro area financial system is more resilient today.