How can policymakers convey that they will be implementing policy that is more accommodative than normal when they have not been clear about what would constitute the normal degree of accommodation? Managing the public’s expectations may be not only difficult but also counterproductive.
More integrated markets would deliver meaningful cross-border private risk-sharing which is currently lacking in the euro area by comparison with the United States. On the institutional side, operationalising the common backstop to the Single Resolution Fund and advancing political discussions on a European deposit insurance scheme are essential steps to bolster the resilience and credibility of the banking union.