However, before I go into this further, I should like to provide some background to this by reminding you of a time when some risks were managed inadequately, which led to a serious systemic crisis, namely the Swedish banking crisis at the beginning of the 1990s. The banking crisis from a risk management perspective Taking a narrow view, one could say that the banking crisis was the result of the institutions and authorities lacking the capacity to assess and manage risks. The banks came from an environment that had been strictly-regulated for many decades and where their operations were so firmly controlled and restricted that a cursory awareness of risk management sufficed in day-to-day operations. The demand for credit was much greater than the supply, which meant that only those with the best credit ratings were allowed to borrow. When the regulations were gradually phased out during the 1980s, the banks and other financial institutions lacked the expert knowledge and organisation necessary to manage the new, increased risks, which were also more difficult to assess. As this curb no longer existed and the banks instead began to compete for market shares, they took on hasty and in many cases unhealthy risks. We were not the only country to experience this development. Over the past fifteen years, many countries around the world have suffered financial crises for similar reasons; as the result of financial deregulation, which has not been combined with the necessary improvements in risk management and supervision.
We will do whatever is necessary to ensure that this pandemic, which is having a massive economic impact, does not turn into a debt crisis or a crisis of the financial system. We will not allow this to happen. We are dealing with a situation which requires us to act with extreme intensity. You have said that the measures taken by the Spanish government and other European governments are appropriate. But you have also hinted recently that the European Union has perhaps not responded quite as effectively. Are you afraid that a crisis of this kind could take its toll on the European project? Let’s hope not. The ECB has already acted. Basically what remains is for Member States also to act and continue to act through their fiscal policies. And we need a pan-European response. We need a coordinated EU fiscal policy response. I am sure that this is what will happen in the end. The ECB cannot be the only policy tool used from an economic standpoint. Monetary policy cannot be the only instrument employed. I am certain that Member States will do something about this and they will adopt a coordinated position in terms of the fiscal policy instruments employed by the EU in response to this huge crisis. The economic impact will be enormous. We just hope that it will be temporary.