I think everyone agrees that the framework passed the test successfully; however, some issues related to the framework’s functioning in the medium term – namely, its efficiency and transparency – have been revealed. As the EU-level discussions on possible minimum harmonization of borrower-based measures are currently ongoing, now is a perfect time to evaluate the role borrower-based measures played during the pandemic.
This is one of the points of Fischer’s 2001 lecture at the first incarnation of this conference. In the emerging markets world there are two problems. The first are also inflation concerns, particularly if inflation expectations are less well anchored. The second are balance sheet effects in the form of unhedged foreign exchange denominated liabilities.