Not everything is rosy even in classical banking business. The very large banks – those deemed “too big to fail” – are not the sole sources of systemic risk. The Spanish case has made this abundantly clear. Here, banks were destabilised by their exposure to the realestate market. These vulnerabilities were created in traditional lending business.
Finally, there is still a great deal of uncertainty about whether potential growth rates will return to pre-crisis levels or settle at a lower level, and this is likely to have implications for the longer term neutral rate of interest. The Eurozone appears to be improving following a weak few quarters, with positive growth impulses from the weaker euro and lower oil prices.