I think this is a key issue that the Commission agenda on Capital Markets Union should address. In my view, one of the obstacles to be tackled is the lack of harmonization in insolvency laws across countries. Unfortunately, in the Commission’s early proposals initiatives to that effect do not feature very prominently.
Coordinated and substantive fiscal remedies were applied, together with concerted monetary policy easing. However, room for manoeuvre on the fiscal front in most advanced economies (AEs) was soon exhausted, and attention had to turn to fiscal consolidation as opposed to expansion. Monetary policy was, by default, the “only game in town” – but it, too, faced a critical constraint.