The adjustment problems, after undue optimism among households and firms in the late 1990s had given rise to the imbalances, will lead to the recovery being more sluggish than usual. Some even consider there could be a more drastic correction that breaks a global upswing in the coming years. Those who are more optimistic point instead to the U.S. economy’s productivity growth; if this remains high, there is less cause to be concerned about the imbalances because a higher potential growth rate permits higher incomes with which to service the debt burden. The Riksbank’s current analysis does not envisage a quick correction of the imbalances. Still, there are grounds for supposing that growth in the American economy in the coming years will not be as high as in the late 1990s. And if the imbalances were to be adjusted more quickly, the Riksbank would, of course, have to take that into account in the formation of monetary policy. Turning now to Europe, we see fewer signs of a recovery. The prospects for Germany, the largest economy in the euro area, are still uncertain. However, a look at the leading indicators does show that firms have become more positive. Imbalances like those in the United States have not accumulated in the euro area and this may benefit a recovery. Moreover, economic policy is also markedly expansionary in Europe, although the scope for fiscal measures is not as great as on the other side of the Atlantic.
As you know, the crisis has also led the Eurosytem to embark on a very limited programme of bond purchases, with a view to restoring the monetary policy transmission mechanism where it had been impaired. This programme has served us well. The monetary impact has been systematically and fully sterilized. Where do we stand? Overall, these changes have been favorably received by the markets. Nevertheless, the sense of crisis has not yet disappeared. Most recently, a joint IMF / EU EUR 78 billion programme has been approved for Portugal. In order to alleviate the persistent sense of crisis, existing programmes must be delivered on. In this respect, their conditionality is of the utmost importance. Countries under a joint programme have committed themselves to conducting structural reforms, whose benefits and positive impact cannot immediately be assessed. These programmes pave the way for stronger and more sustainable growth in the near future. To be absolutely clear, there is no doubt that countries under assistance have to deliver fully on their austerity programme. Solutions akin to debt restructuring are not an option. It would push these countries into a disastrous scenario, associated with a sustained loss of access to any kind of financing. Programmes can and do work. If you look at Eastern European countries that received conditional financial assistance from the EU and the IMF two or three years ago, you will conclude that these programmes proved to be highly useful and successful. Hence, the assessment has to be cautious, before being definitive.