Even though individual banks looked healthier than ever in 2007, the system as a whole was more fragile than ever. This is why, in January 2011, the European Systemic Risk Board (ESRB) was established and charged with ensuring the integrity of the EU’s financial system.
That is, monetary and non-monetary policy must work in concert to reduce the impact of a decline in labor demand; neither can do it alone. Returning to the question posed at the beginning, this model suggests that the Federal Reserve is performing about as well as it can on both mandates.