In this context, the paper Borio and Zhu presented at this conference points to a very important link between monetary policy and the perception of risk by economic agents – something which has, so far, been neglected.
The speed with which the exit will proceed will depend on how quickly financial markets get back to normality, on the pace of the economic recovery, on banks’ ability to obtain stable funding from private capital markets. Finally, as Balcerowicz forcefully argues, an adequate response to debt distress requires to counter with decision the ongoing erosion of fiscal discipline.