But it must not suppress financial innovation; otherwise we would eliminate its indispensable contribution to economic growth and development. The European sovereign debt crisis has raised awareness of the importance of financial markets and their disciplining effect. True, bond markets took note of differences in sovereign risks much too late.
But did not economic policy perform even weaker in preventing excessive deficits and the emergence of severe macroeconomic divergences? For this reason, I am sceptical about correcting undesirable results in the financial markets by direct prohibition or by suppressing market activities.