As a matter of fact, the effects of and responsiveness to price instruments usually turn out far better than expected. Examples are abundant. It is foreseeable that with market liberalization of the economy, price mechanism will play a more prominent role and there will be more willingness to use price instruments.
The European push towards a capital markets union reflects not only the need for increased cross-border risk-sharing in a currency union, but also the understanding that a more balanced funding mix is better at helping to absorb economic shocks, much in line with Alan Greenspan’s “spare tyre” hypothesis.11 There is also the hope that deeper and better integrated equity markets will support innovation and productivity growth in the European Union.