The growth in consumer credit and the fact that it was divided among all of the banks is evidence of the increasing competition between the banks in this market. As is known, the mortgage market is a particularly competitive market and the growth in the volume of mortgages began a number of years before the growth in consumer credit.
And, sensing what might happen, the two economists continued: “That need will be most pressing where debt problems place banking systems at risk and where bond market contagion is pervasive.” At the time, it was assumed that by constraining governments’ ability to fiscally stimulate demand – and by shifting monetary policy to the European level – governments would have no choice but to implement structural reforms, improve their supply side, and strengthen their potential for sustainable growth.