As a matter of fact, the two most important indicators of growing financial imbalances – real estate prices and credit growth – show only tentative signs of turning upwards. What this underlines is that following a major financial crisis accommodative monetary policy does not necessarily blur a prudent assessment of risk.
The European Commission has made a legislative proposal based on the Liikanen report and it will be finalised under the term of the next European Parliament. In the future, the Banking Union, when properly implemented, will help us resolve banking problems while avoiding using taxpayers’ money for bail-outs. This in turn means also better incentives in banking and hence a more stable financial system.