In brief, these three institutions – education, labour market and the business environment – must be designed to generate a context that fosters personal initiative, either in the form of educational attainment, job searching or entrepreneurial activity. Nevertheless, one needs to realise that these are necessary – but not sufficient – conditions.
In those countries where overvaluation appears to be most acute, the housing market represents a source of risk to household sector balance sheets. From a broader financial system perspective, lending to households – even though on a declining path – remains an important business for most euro area banks.