And banks know how the stress scenario will play out in advance, which makes it more contained than it would be in practice. The GFC taught us that a synchronised global downturn can happen very quickly and what was thought truly exceptional (ie the Great Depression) might not be so improbable.
What we need to do now, despite its challenges, is to complete the Banking Union, including a European deposit insurance scheme. Also, large investments needed for the recovery from the Covid- 19 crisis underline the importance of finally creating a genuine Capital Markets Union. Second, the current crisis calls for a continued strong role for fiscal policy.