•  It avoids liquidity bottlenecks that could impair the working and, potentially, even the stability of the financial system. However, while the ECB can make an important contribution to the smooth functioning of the money market by means of its liquidity-providing measures, it cannot solve the underlying problems.
It is a core tenet of market economies that firms can fail. Joseph Schumpeter called this “creative destruction”; Allan Meltzer put an even finer point on it: “Capitalism without failure is like religion without sin. It doesn’t work.” Not taken into account with regard to banks were the side effects of failure.