Nevertheless, we have not yet completed the task of attaining our goal of a sustained path of inflation close to but below 2%. But while monetary policy has been successful at sustaining the area-wide recovery, it is unable to significantly counteract the effects on individual countries from asymmetric shocks, which have been substantial in recent years.
In that scenario, some of the financial exposures that were taken on in a mood of optimism over the past several years could be unwound, possibly quite disruptively. One’s answer to such questions hinges to a considerable extent on what one thinks was behind the enhanced stability of the past decade and a half.