Addressing crisis situations is not only about failing banks and deposit insurance. It is also about the financial system’s ability to absorb shocks and avoid excessive deleveraging when losses materialise which exacerbate the negative shocks to the real economy. This brings me to my third and final point: the need for a more effective and centralised macroprudential policy in the euro area.
Let me explain. Macroprudential policy and monetary policy strongly complement each other. For instance, during phases of risk build-up, effective macroprudential policy can remove the burden from monetary policy with respect to financial stability concerns.