the modest recovery. the desperate search for growth and jobs by governments and policy makers, following seven years of gradual reforms, could give some credence to this view amidst feelings of reform fatigue. however, i argue that it would be wrong to listen to these opinions. the pace of the veld, j. ( 2013 ), “ fiscal consolidations and spillovers in the euro area periphery and core ”, european economy economic papers 506, october. rannenberg, a., c. shoder and j. strasky ( 2014 ), “ the macroeconomic effects of the european monetary ’ s union fiscal consolidation from 2011 to 2013 : a quantitative assessment ”, mimeo. bis central bankers ’ speeches recovery is not being affected by lack of finance. finance would be abundant if there were investment projects with prospects of good return. a fourth possible answer to the conference ’ s question relates to a “ liquidationist ” view that amazingly surfaced again, in spite of the lessons from the 1930 ’ s. its defenders claim that macroeconomic policies, aimed at mitigating the recessionary consequences of the crisis, do more harm than good in the medium - term. however, some accept that reforms to strengthen capital and liquidity buffers in credit institutions were necessary. according to this view, the crisis stemmed from excessive credit, debt and bad investments and thus, deleveraging and liquidation of bad capital must happen. applying a very accommodative monetary policy to fight recession would risk inflation or, in the more modern guise of the doctrine, would lead to asset price bubbles and future crises. consequently, monetary policy, in view of the alleged ineffectiveness of macro - prudential policy, should have become restrictive since 2011 or 2012. according to this reasoning, precedence should be given to the financial cycle over the stabilisation of the business cycle or, in more telling terms, precedence should be given to the risk of asset price bubbles over the risks of deflation and unemployment. acknowledging that my description of these four different opinions has hardly been neutral, in my view, a combination of the first and second approaches is the appropriate response to the question setting the conference theme. nevertheless, i want to clearly state that the financial regulatory reform has to be completed and extended through further efforts to contain risks in the so called shadow banking sector and to strengthen macro - prudential policies. believing that advanced economies face a protracted period of low growth that requires accommodative monetary policy

real sector ”, quarterly journal of economics, 112 ( 3 ), pp. 663 – 691 ; diamond d., ( 1984 ), “ financial intermediation and delegated monitoring ”, review of economic studies, 51 ( 3 ), pp. 393 – 414. it started with gurley, j. g and shaw, e. s. ( 1955 ) “ financial aspects of economic development ” american economic review, 45, pp. 515 – 538 ; goldsmith, r w ( 1969 ) financial structure and development ” yale university press ; shaw, e. ( 1973 ) : “ financial deepening and economic development ”, oxford university press, new york, and mckinnon, r. i. ( 1973 ) “ money and capital in economic development ”, brookings institute. more recently, see king r., and r. levine, ( 1993 ), “ finance and growth : schumpeter might be right ”, quarterly journal of economics, 108, pp. 717 – 737 ; rajan, r. and l., zingales, ( 1998 ), “ financial dependence and growth ”, american economic review, 88, pp. 559 – 586 ; fisman, r., and i., love, ( 2007 ), “ financial dependence and growth revisited ”, journal of european economic association, 5, pp. 470 – 479. cecchetti s. g., and e. kharroubi, ( 2012 ), “ reassessing the impact of finance on growth ”, bis working paper 381 and arcand j. l., berkes e. and panizza u., ( 2012 ) “ too much finance? ”, imf working paper 12 / 161. cecchetti s. g., and e. kharroubi, ( 2012 ), “ reassessing the impact of finance on growth ”, bis working paper 381. popov a., ( 2013 ), “ credit constraints, equity market liberalization and growth rate asymmetry ”, journal of development economics, 107, pp. 202 – 214 ; beckaert g., and popov a., ( 2015 ), “ on the kink between the volatility and the skewness of growth ”, mimeo. reinhart c. m., and rogoff k. s, ( 2009 ), “ this time is different.