Banks’ ability to withstand adverse shocks has improved. The increase in highquality capital needed to satisfy the capital adequacy requirements envisaged by the Basel III rules that will be phased in by 2019, which was € billion at the end of 2010, dropped below € billion last December; already today most of the largest intermediaries would meet the new prudential requirements.
The third feature of the current recovery phase is therefore the divergence between developments in economic activity and prices. Underlying this divergence is the fact that firms are now able to produce a greater number of products more efficiently and at a lower labor cost. Higher productivity has been achieved in a number of ways.