These dynamics underscore the importance of strengthening the mechanisms that prevent such risks – the SGP, surveillance of broader macroeconomic imbalances, and stronger financial supervision. However, the liquidity dry-outs and the contagion risks also call for stronger backstop mechanisms, to provide significant, albeit temporary, liquidity assistance. For the same reason, a permanent crisis management framework is appropriate for the euro area.
First responses These lessons show us that the crisis was an interlinked phenomenon involving the public sector, real sector and financial sector. Consequently, a comprehensive response to the crisis needs to address all these sectors and the ways in which they are interconnected. So far, there has been important progress in all 5 areas I identified.