Taking the context of deeply malfunctioning credit markets, our recent decision on mediumterm liquidity has been central in banks returning to play their vital role in the real economy. Banks account for over two thirds of external financing of firms in the euro area.
Second, if supply-side reforms incur short-term pain, at least part of that pain needs to be alleviated through demand measures. For instance, if labor market reforms temporarily raise the unemployment rate, it is quite sensible to stimulate demand to smooth the transition through those reforms. Third, I think that from a theoretical perspective, the distinction between demand- and supplyside measures is quite blurred.