On the other hand, they can have a negative impact on the incomes of households and the earnings of companies, thereby reducing economic activity and dampening the inflation outlook. In the past, the euro area has been particularly vulnerable to the second channel, as surges in energy prices weakened the spending power of households, and reduced inflation over the medium term.
In the last ten years, the number of banks in Europe (to be precise, in the 15 EU countries prior to 2004) has decreased by almost 30%, while at the same time the total assets held by the banking system has increased by more than 100%.