In the meantime, it is important to note that economic and financial fragmentation in the euro area has declined significantly since last summer. This has had beneficial effects for the real economies of all euro area countries. Banks in stressed countries have been able to regain access to interbank and capital markets – and they have raised funds as well as capital.
Larger corporations have benefited from lower borrowing costs in capital markets. And small and medium-sized enterprises have seen borrowing costs from banks somewhat reduced. All of this should support investment. Target balances, which provide a powerful summary indicator of fragmentation, have declined by almost 300 billion euros or 25% from their peak.