But in an environment in which the financial sector is prone to excess and the supervisory structure does not respond sufficiently, the interaction of low interest rates and financial vulnerabilities can clearly be dangerous. Notably, the generally stable macroeconomic environment that prevailed before the crisis may have exacerbated this problem, as it contributed to overly sanguine perceptions of risk.
This type of distinction, making full use of the Treaty’s new Article 136, has to be applied in different domains, drawing the appropriate lessons of the crisis for the functioning of the monetary union. We hope that the ongoing negotiations over the legislative package will permit the texts to be significantly improved along these lines.