As the crisis erupted, it spread ferociously from the sub-prime US markets to financial markets around the world, demonstrating the interconnectedness of national financial systems and the spillover impact of external developments on domestic policy actions. Importantly, central banks found that sentiment and confidence were remarkably correlated across countries. 17.
In this respect, the growth rate of mortgage loans to households is rather high and is associated with fairly dynamic housing market developments and real estate prices in several euro area countries. There remains substantially more liquidity in the euro area than is needed to finance non-inflationary growth. At present, it is not clear how this excess liquidity will be used in the future.