To sum up, public policy in general and financial supervision in particular thus have an important role to play. They have to keep the long-term stability and health of the financial system in mind, correcting for the - very often - rather short-term orientation of financial markets. Public policies should be designed to avoid the headache after the party, by moderating exuberance and exaggeration.
By ensuring that inflation returns to the target of 2 per cent over the medium term, the recent monetary policy actions by the ECB can contribute to alleviating the drag on households’ real income and create the conditions for a return to sustainable growth and improved living standards.