We had to intervene – for monetary reasons – only because for a long time governments did not take their responsibility for ensuring financial stability seriously. Have we perhaps gone too far as regards our monetary policy? To answer that, we should look at the policy rates of other currency areas, such as Japan or the United States, which are much lower than ours.
The new instruments of risk dispersal have enabled the largest and most sophisticated banks, in their credit-granting role, to divest themselves of much credit risk by passing it to institutions with far less leverage. Insurance companies, especially those in reinsurance, pension funds, and hedge funds continue to be willing, at a price, to supply credit protection.