As there is empirical evidence that protracted low interest rates may have fostered financial market participants’ grog risk appetite and contributed to the dynamic growth of credit aggregates worldwide via this risk-taking channel in the monetary policy transmission, the events of the past 12 months also throw up some serious questions on the role of monetary policy.
Some reforms have recently been undertaken, both at the national and the European level. For example, personal tax wedges have been reduced and employment protection legislation has been relaxed in some European countries. And I fully support the current EU Commission initiative for measuring the cost of existing legislation and reducing the administrative burden on companies with 25 percent by 2012.