On the supply side, economic growth may be dampened in future as the financial crisis is likely to reduce the level and growth rate of potential output. This may occur through depressed capital accumulation, with investment held back by a higher cost of capital and credit restrictions.
Reflecting the incompleteness of the euro project, “redenomination” risks materialized through very high credit and sovereign spreads, undoing financial integration and replacing it with financial fragmentation along national lines, which came to represent a hallmark of the euro area crisis.