This resulted in the “Great Recession” and the corresponding fall in global economic activity. The ensuing sovereign debt crisis in the euro area can be seen – at least to some extent – through the lens of global liquidity and its cycles. In an environment of abundant liquidity and high risk appetite, sovereign yields in the euro area converged at very low levels.
The monetary programming exercise ought to have produced the desired results. The only snag - a critical one indeed - was the issue of independence of the Bank with regard to interest rate policy decisions. Notwithstanding this snag, the first operational framework for indirect monetary control was at least set. In 1996 the monetary programming was given a different twist.