The less responsive short term rates are to this upward pressure, and the stronger the buildup of inflationary pressures in the wake of depreciation, the steeper the yield curve is likely to get. Long-term borrowing costs will take the burden of slow policy responses to a widening interest differential and currency weakness.
The banking union has put a stop to the vicious triangle that existed in each country between big banks, the regulator – in other words, the finance ministry – and the supervisor, which was generally the national central bank. We have created some distance between the banking sector and the supervisor, which is a good thing for the people of Europe.