At the same time, as revealed by the developments in break-even rates illustrated in Figure 2, private expectations regarding euro area inflation remained correctly anchored, even at these relatively short horizons. By implication, real rates at such maturities fell substantially, as shown in Figure 3.
These changes must be made so that the largest firms no longer have the incentive to take too much risk and gain a competitive funding advantage over smaller ones. Credit must be allocated efficiently and equitably based on prospective economic value. Without these changes, this crisis will be remembered only in textbooks and then we will go through it all again.