Beyond the direct effects on residential investment, the extraordinary collapse in house prices resulted in a huge loss of household wealth – at last count, net home equity is still down 40 percent, or about $ trillion, from 2005.6 This loss of wealth has weighed on the finances and spending of many homeowners.
I will then focus on a number of policy issues examined in the Annual Report which I consider to be of particular importance. Economic and monetary developments Looking back to 2004, the ECB’s monetary policy operated in an environment of gradual economic recovery and subdued domestic inflationary pressures in the euro area.