So, there is a tendency – on the lenders’ side – for a large share of savings to be held in cash, or in very short-term debt instruments. Borrowers, however, typically require loans with a long maturity. The more potentially lucrative a project, the more deferred its economic payoffs.
If the banking sector is too large, the national taxpayer will be unable to bear the costs. Consequently, European solidarity will be required to resolve the problems. This is comparable to the case of systemically important banks, which depend on the support of the taxpayer if the bank gets into difficulties.