Mr. Klaus Regling:

To some extent, but let me talk about it. I would not go too far because someone cannot excuse everything with that. The fact that monetary conditions could be pro-cyclical was well known to policy makers. The Senator asked what could be done at the national level, responding to national differences, and here he is back to fiscal policy and supervisory action.

I already talked about that briefly earlier. Fiscal policy could have been counter-cyclical, but what we actually see - and we already knew it at the time - is that fiscal policy was moving, from the first half of that decade to the second half, from being counter-cyclical to becoming pro-cyclical, and that added fuel to the fire. Fiscal policy could have addressed some of the problem, but it did the opposite - although, again, due to the lack of good methodology, the full extent was not known and supervisory action that could have been taken was not taken - for example, loan-to-value ratios were reduced very late and by very little. Those are the two areas where the national authorities can do something even in an incomplete monetary union.