But the main lesson of the crisis has been that the restructuring and strong capitalisation of banks is an important condition for restoring the smooth provision of credit to euro area corporates and households. This is why the comprehensive assessment of the banking system is important so that the banks can free up balance sheet capacity to extend new loans.
Assessment In light of this experience, it is worth asking whether the reforms could have been implemented differently. For example, did it make sense for euro area countries to reform while fiscal policy was contractionary? Or when monetary policy was close to the zero lower bound and therefore could not react to adverse cyclical developments? I have three points to make here.