3 Understanding developments in services is crucial to our understanding of developments in the economy as a whole. Services account for 69% of the euro area economy and 70% of total employment. 4 Private sector services represent roughly half of the economy, and government-related services make up the rest.
A fixed cap might also be highly procyclical. Banking organizations would be forced to shrink, change their asset mix, or face supervisory discipline during downturns because spreads would be more likely to run into a fixed cap at such times.