By relaxing its fiscal policy, the government of a Member State may hope to enjoy the short-term benefits of increased economic activity while the negative consequences are spread across the entire euro area.
With this in mind, I will move on to the range of necessary and feasible solutions, underlying in particular the role of securitization schemes and the creation of Asset Management Companies (AMC) to achieve an orderly and fast resolution of NPLs. The NPL problem is one of the main reasons behind the low aggregate profitability of European banks.