That topic, incidentally, will be discussed in more detail by Jens Weidmann in his speech tomorrow at the European Banking Congress. Let’s look first at the money market. The 2007 financial crisis caused the traditional money market to dry up, effectively rendering it dysfunctional. Since then, we have seen heightened risk aversion.
All these elements of the new European supervisory framework are expected to address the challenges related to an integrated area such as the EU. However, in the euro area the very existence of the single currency amplifies the interconnectedness between countries and financial systems and thus the potential for contagion in stress situations.