Therefore, more flexibility should be introduced into the budgetary norms in periods of prolonged economic downturn. However, the growth strategy should not be considered a plea to increase public sector debt to unsustainable levels.
Some have asked whether the extraordinary accommodation being provided in response to the financial crisis may itself tend to generate new financial stability risks. This is a very important question. To put it in context, let’s remember that the Federal Reserve’s policies are intended to promote a return to prudent risk-taking, reflecting a normalization of credit markets that is essential to a healthy economy.