Our most significant non-standard measure is without doubt the fixed-rate full allotment policy, which provides central bank intermediation where the interbank market fails and which operates in a very quiet manner. Although this policy can moderate the symptoms of the crisis, it cannot provide the lasting solution to this crisis.
This solution will require the decoupling of banks’ fortunes from the funding situation of their sovereign. In light of recent developments, swift recapitalisations of banks in a coordinated fashion will prove crucial. A lasting solution to the sovereign debt crisis must tackle its root causes. To this end, the affected countries must improve their fiscal adjustments and implement structural measures aimed at promoting growth.