This ratio has doubled in the United States since 1980, while it has remained relatively stable in Europe. xvi Our social welfare system plays a key role here: it even defines Europe, whether it is based on a Bismarck or a Beveridge model. Secondly, the European model organises industrial relations and economic power relations in a more balanced way between employers and employees. This is enshrined in the Charter of Fundamental Rights of the European Union, whether one follows the Nordic traditions of negotiation or the Latin ones of regulation. Finally, a high level of public services remains a key factor of integration, from transport to health. As regards the level of public spending, there are significant differences between European countries: unfortunately, France displays the highest level of public spending, at 56% of GDP, and must make its public sphere more efficient. But the euro area average, at 47% of GDP, illustrates a different societal choice to that of the United States and the United Kingdom, with ratios of 35% and 38% respectively, and even more so the large emerging countries Redistribution and social welfare system + industrial relations + public services: let us call it the European social model, or "Soziale Marktwirtschaft" if one is German and more liberal. The vast majority of our fellow citizens, beyond their national or political differences, are attached to this common matrix. Let us affirm it, without shame: it is not only a legacy from the past, it is an asset, today.
Rapid credit growth, emerging external imbalances with growing current account deficit (reaching at one point 10% of GDP), and consequently rising external debt. Price bubbles in the real estate and equity markets coupled with the expansion of the construction sector all provided red flashing lights far ahead of the 2008 global market mayhem. In order to preserve stability of the banking system throughout the crisis, resolute action had to be taken years ahead of the global financial crisis. In the period of large capital inflows, raising interest rates to tame the cycle was not a policy option due to the risk of exacerbating capital inflows even further. Therefore, already in 2003, in the early phase of the cycle, the CNB started to implement a range of measures to limit excessive lending and the increase in foreign debt, which were gradually adjusted and tightened until 2007. Stringent capital and liquidity requirements, way above and beyond anything we have available in the current macroprudential setup, were necessary in order to stem excessive risk-taking and instil resilience into the system to cope with a potential fallout. Such measures were at that time labelled (by banks and some of the colleagues) "administrative" tools, but would later be classified under macroprudential policy instruments. For example, implicit tax on credit growth (when we asked banks to subscribe zero yielding CB bonds for any  euro of credit growth over 12% per annum), and high marginal reserve requirement on foreign borrowing by banks, together with high capital requirements.