21  Table 1: Fiscal and monetary policies to increase commercial credit (*) Country  Fiscal  % GDP  Monetary  % GPD  United States  Forgivable loans to small and medium enterprises (SME)  3.4  Bank credit (TALF, MSLP) and purchase of corporate bonds (PMCCF - SMCCF)  7.3  Germany  Loans with federal and state guarantees  25.3  France  Loans with guarantees, includes reinsurance value  15.2  Secured loans, part of the amount estimated by the IMF  --  Italy  33.8  TLTRO loans from the ECB. Long-term refinancing to the banking sector (up to 3 years) conditional on non-financial corporate loans  Spain  Guaranteed loans, excludes facilities for lowincome households  9.6  UK  Guaranteed loans  16.8  TFSME loans.
By doing so, they missed the negative effects and excesses that arise from the herd behavior of the financial institutions, many times a consequence of the pro-cyclicality that is inherent in the financial activity and the regulatory framework itself. The attention of the supervision was focused on the banking sector, but insufficient attention was given to its interaction with the non-banking financial sector, that by being much less regulated, in the meantime was increasing in size and importance. Also, as part of their general and commending goal to focus their supervisory approach on the most important risk sources of the financial industry, but also as a sign of their objective difficulty to keep the pace with the financial markets developments and innovations, the supervisory authorities relied more and more on the market discipline and on the sophisticated and unclear risk models of the financial industry, that also proved to be deficient. Some times, the structure of the supervisory authorities has proven to be fragmented or too complicated, giving rise to regulatory arbitrage by the market players. Other times, the resources needed to effectively perform the supervisory role have been limited, negatively affecting the supervisor’s performance. But this crisis showed that risk came also from other sources, out of the direct control of the supervisory authorities in a given jurisdiction. For example, the increasing asset prices were fueled by ample liquidity and credit conditions, which were often affected by international developments and financial flows.