The analytical underpinnings of the ECB’s strategy, which have granted a prominent role to the bank-based transmission mechanism in the context of our monetary pillar, are well-suited for this task. At the same time, many other factors, relating to legacy and structural problems, are holding down bank profitability.
A shift toward more equity financing is urgently necessary, for which, an appropriate environment has to be in place for attracting new non-debt capital flows. *** So, what should be the way ahead?