A lot has been done but there is a need to complete this work, as we have stated recently, to protect the system against market instability. We have also repeatedly called for a timely consolidation of public finances, in contrast to some commentators and academics. Had this consolidation started earlier, rather than under the pressure of the markets, it would have been less painful.
The same pressure needs to be exerted on the supervisory and fiscal authorities in charge of ensuring the solvency of financial institutions. An unconditional supply of liquidity by the central bank to address systemic problems may create disincentives to recapitalise and restructure the fragile parts of the system, and thus delay the recovery.