When a large bubble collapses and severely damages the financial system, monetary policy has extremely limited effects, as we have seen in the current financial crisis. Furthermore, if the process of bubble formation involves "Greenspan Put"-type expectations among market participants, it may lead to excessive risk-taking activities.
Moreover, countries under macroeconomic adjustment programmes in the context of ESM assistance and which fail to remain on track would be placed under financial receivership. And finally, the institutional arrangements at both national and supranational level have to be strengthened. At the national level, independent budget offices would ensure reliable forecasts – a prerequisite for sound planning and implementation of budgets.