On the convergence side, the European Commission, for example, suggests supporting structural reforms through the EU budget. In principle, such a tool could contribute to reform implementation by way of positive incentives. However, for that to work effectively, the Commission proposal needs to be significantly strengthened in three ways. First, reforms should be selected on the basis of their implications for macroeconomic prospects.
12 But the importance of considering intermediation channels in the aggregate, as opposed to taking them into account for some firms at some times, has remained difficult to quantify. 13 Moreover, that work has tended to concentrate on the intersection between intermediaries and nonfinancial borrowers. A characteristic of the recent crisis, however, was the critical role of interactions within the financial sector.