A potential further deterioration in credit quality could lead banks to tighten their lending standards and a less benign scenario could emerge involving a more significant re-pricing of risk and de-leveraging.
The Commission is the guardian of the Treaty and the ECB respects the Commission’s decision to seek legal clarity on the implementation of the Stability and Growth Pact. The ECB does not see a need to change the Treaty and it considers the Stability and Growth Pact appropriate in its current form.