As well as labour markets, the banking system also plays an important role. Only sound banks can cope when loans go bad in a downturn. And in a downturn, only sound banks can provide funds to promising companies and thus prepare for the next upturn.
And here, a lot has been done since the crisis – even though some banks still need to do more homework. All in all, banks in the euro area now hold much more capital and liquidity than they did prior to the crisis – they have become much more stable.