have to step up its level of support. a policy of preserving favourable financing conditions includes a second element. to ultimately empower fiscal policy as a transmission channel of monetary policy, the ecb needs to provide liquidity when risks of self - fulfilling price spirals threaten to undermine stability in the euro area as a whole. as was the case during the pandemic, this may require temporary flexibility in the use of instruments. being clear about this upfront reduces the emergence of destabilising dynamics in the first place and minimises the extent of interventions when they are needed. in such situations, risks of moral hazard should not condemn the central bank to a course of inaction. these risks should be governed by other institutions outside crisis times. the lesson for fiscal policy is that, in lower bound episodes, it has to become more responsive to downturns. this requires fiscal tools that are specifically designed to provide macroeconomic stabilisation, ideally at the euro area level, but at least at the national level. put simply, unconventional monetary policy needs to be complemented by unconventional fiscal policy. the concept of unconventional fiscal policy is not yet well established. [ 12 ] a simple google search, for example, returns more than 700, 000 results for unconventional monetary policy but only about 8, 000 entries for unconventional fiscal policy. in essence, unconventional fiscal policy comprises measures that go beyond traditional automatic stabilisers, which tend to be too small to offset the effects of an adverse demand shock at the lower bound. these unconventional measures are only activated when the economy heads into a deep recession. in the united states, for example, the length of unemployment benefits automatically increases as soon as the unemployment rate exceeds a certain threshold. the use of job furlough schemes in large parts of the euro area in response to the pandemic is another powerful example of how unconventional fiscal policies can stabilise household incomes to avoid risks of long - term scarring. similarly, theoretical and empirical evidence suggests that budget - neutral policies that work through the revenue side – for example, by engineering a specific path for consumption and labour taxes over time – can effectively support the efforts by central banks to boost inflation expectations and consumer spending at the lower bound. creating a framework for effective stabilisation in the euro area refocusing stabilisation along these lines requires an institutional framework that reliably creates space for fiscal policy in good times and allows this space to be used in bad times to provide a policy mix that

in the wealth of individuals, the composition of wealth has shifted towards a greater emphasis on wealth in the form of financial assets. this is manifest in the increase in the relative market value of stock exchanges, which is clearly visible in most euro area countries. the increase in financial wealth relates closely to the shift towards a market - oriented financial system and also to the increased importance of institutional investors. all the developments i have discussed so far underlie recent changes in the structure of the financial system. financial systems in the euro area could be departing from a bank - dominated structure, becoming more market - oriented or even securitised. an indicator for this development is the declining share of deposits in households ’ portfolios. meanwhile, aided by technology, the disintermediation process on the assets side is under way in a number of countries, even though the process has been quite slow. however, the actual effect of the structural change towards more market - based financial transactions could be larger than the share of external financing from the market would suggest. the existence of market - based financing through increasing competition within the banking sector may have affected the terms and conditions of bank lending in the sense that banks are now more clearly no longer the only potential supplier of external funding for all but the smallest firms. in other words, the contestability of external financing may have increased, with potential competition from market - based financing limiting the scope for banks to profit from lending relationships. it could be added that banks have been encouraged to take part in the process of securitisation by undertaking investment banking activities such as underwriting, which uses their capacities for collecting information as well as private information based on existing credit relations. this also tends to boost the share of non - interest income in the total revenues of banks. the changes in the structure of the financial system and the role of banks are also illustrated by the emergence of new types of players in the financial system. most apparent is the rise of institutional investors who are gaining a more important role in allocating savings from the household sector to the corporate sector, both domestically and across borders. on the one hand, they have provided new types of savings products, often supported by tax concessions on pension or life insurance savings, as well as by technological changes which reduce the costs of collecting savings, gathering information and assessing risk. on the other hand, they have created more demand for different types of securities. while they have enhanced structural changes in the financial system, they have also started to compete