Third, the way in which central bank financing was used effectively in the classic lender of last resort function during the crisis. The banks: troubled loans As was already foreseen at the outset of the programme, repairing the banks is a lengthy process. At first, negotiators on the other side were inclined to wonder why more action had not already been taken.
These dynamics underscore the importance of strengthening the mechanisms that prevent such risks – the SGP, surveillance of broader macroeconomic imbalances, and stronger financial supervision. However, the liquidity dry-outs and the contagion risks also call for stronger backstop mechanisms, to provide significant, albeit temporary, liquidity assistance. For the same reason, a permanent crisis management framework is appropriate for the euro area.