Both monetary and fiscal policy have given stimuli. Owing to the extensive social safety nets, the automatic stabilisers have been the main channel of fiscal expansion. However, the strength of the recovery is disappointing. At the heart of the matter lies continued weak domestic demand. The euro area seems to lack the ability to initiate a strong and sustainable expansion on its own.
The European Commission’s strict interpretation of this principle means it is no longer possible to manage a crisis by resorting to the Interbank Deposit Protection Fund and the Mutual Banks Deposit Guarantee Fund, without sacrificing investors, as had traditionally been the case in Italy.