Nor do I want to discuss now more specifically what went wrong with the operation of government and financial supervision policies against the novel background of a single currency regime. Clearly some countries continued on traditional policy paths – in terms of fiscal policies and cost competitiveness – that were in fact unsustainable without the safety valve of devaluation.
Although corporate financing via the capital markets and government financial institutions continues to expand, the increase in overall corporate financing seems to indicate a clear slowdown under the stagnant economic conditions. Banks remain cautious in extending loans with a view to improving their medium-term profitability and financial soundness.