The financial system’s resilience to shocks is much better now than in 2008. But there is no room for complacency. Digital banking and digital finance have the potential to change market structures very rapidly. There is also room for better oversight of non-bank players (“shadow banking”) and better incentives for bank senior managers. The regulatory community has to address these changes.
According to Eurostat’s flash estimate, euro area annual HICP inflation was 2.2% in December 2012, unchanged from November and down from 2.5% in October and 2.6% in August and September. On the basis of current futures prices for oil, inflation rates are expected to decline further to below 2% this year.