Fourth, one should take into account what Maurice Obstfeld has named the fiscal dimension of international liquidity4: expanded international lending facilities, including an expanded IMF or a stronger European framework, cannot remain unconditionally solvent in the absence of an expanded level of fiscal backup. Global financial safety nets should be backed by sounder fiscal fundamentals in all major economic areas. I will now conclude.
What monetary accommodation definitely cannot do is tackle the root causes of low growth potential in the euro area – the structural barriers that hamper competition, innovation, and hence productivity. Addressing these structural deficiencies would also go a long way towards improving the transmission of monetary policy impulses. 3.