The failure of one financial intermediary can lead to failures of other financial intermediaries, even when the latter have not invested in the same risks and are not subject to the same original shock as the former. 3 Second, widespread financial imbalances can build up over time and then unwind abruptly.
The euro area is going in the right direction. Two years ago, maybe even one year ago we didn’t have this direction, this steady and improving growth. Certainly it is not enough and everything should be done to prop it up – but it is very important to know what the direction is.