The Great Depression – a combination of recession, deflation and bank failures – is a clear historical example of what can happen if central banks fail to provide liquidity to the financial system. The monetary policy measures taken by the ECB have helped to avoid a collapse in money and credit and to eliminate the spectre of the Great Depression.
They have not only avoided a collapse of the financial system, but also, and more importantly, prevented a surge in unemployment and poverty in the euro area. In so doing, we have proven that the three objectives of stability, efficiency and equity are mutually supportive, and that the ECB can effectively contribute to containing inequalities within its Treaty mandate.