Greater resilience of major banks at the core of the financial system has allowed the system to absorb, rather than amplify, the economic shock. And in turn, this helped European economies weather the storm. As we have seen, today Europe and the world need each other more than ever in keeping the financial system stable and safe.
But we know all these, why was the EU zone not successful? As noted by Sargent and Wallace in their famous article “Some unpleasant monetarist arithmetic”, “tighter money today leads to higher inflation not only eventually but starting today”.