Conclusion Roughly eight years of extremely accommodative monetary policies on both sides of the Atlantic might lead to the notion that the ECB and Fed have been confronted with similar or even homogenous challenges. This would be a misapprehension. Major institutional and structural differences at the onset of the financial crisis explain why the clean-up efforts in the US were faster and more effective and the recovery was more sustainable. After the institutional short-comings of Monetary Union had been painfully exposed, much progress has been achieved on the road to completion and further integration. However, this institutional reform package took time. Now, economic recovery, although still timid, is under way in the euro area. But this finding cannot be taken as an excuse to rest on our laurels. More determined structural reforms need to be implemented to lift the growth potential and overcome the ultra-low interest rate phase. A more determined approach to tackle the problem of non-performing loans is necessary to tackle the remaining legacy of banking crisis. When the macroeconomic ship is engulfed by a major storm, all hands – not just monetary policy – need to man the pumps. This, indeed, holds true on both sides of the ocean. 1 Lang, J. H., Peltonen, T. and Sarlin, P., “A framework for early-warning modeling with an application to banks”,  Working Paper Series, ECB, forthcoming. 2 Ghysels, E., Idier, J., Manganelli, S. and O. Vergote, (2014), “Ahigh frequency assessment of the ECB Securities  Market Programme”, ECB Working Paper No. 1642.
Longer maturities have smoothed the growth of borrowers' debt burden in terms of monthly payments of a mortgage. Of course, looking at total loan servicing costs, the overall debt burden has increased. When we compare Estonia and other Baltic countries with more developed economies, there is obviously room for further credit growth: total bank credit as a percentage of GDP in 2004 was over 100 percent in the euro area, around 60 percent in Estonia, and only 20 percent in Lithuania. And although it is rapidly increasing, the debt burden of Estonian households, at 32 percent of GDP by end-2005, was still about two times lower than in the Nordic countries. Secondly, the increase in incomes enables people to upgrade their living conditions. For example, the number of square meters per capita in Estonia (at around 30) is relatively small compared to Sweden  2  BIS Review 81/2006  (45) or Denmark (50). Moreover, older housing stock needs quality improvements. Both these factors may indicate that real estate markets may continue to perform reasonably well over the medium term, even if some slowdown might be ahead. Indeed, the relative contribution of Estonia's construction sector to GDP is hardly exceptional if compared to many other EU countries. Are risk premia sufficient? However, this rapid growth poses important questions of sustainability and stability, especially in countries with shorter borrowing experience.