Compared with the ECB staff projections published in September, the range for 2010 is unchanged, while the range for 2011 is marginally higher. Available forecasts from international organisations provide a broadly similar picture. Risks to the outlook for price developments are broadly balanced. Upside risks relate, in particular, to developments in energy and non-energy commodity prices.
In fact, the authorities might be forced to bail out the bank with taxpayer funds in order to prevent a systemic meltdown. Regulators therefore have to create a framework that gives supervisors the ability to act. They must be able to resolve or restructure a failing bank – however large, interconnected or significant it may be.