ABSTRACT
The expansion in the amount of loans led to an increase in the real home price index, with harsh consequences on households’ purchasing power. Indeed, many individuals found themselves incapable of affording a house. Lending to high-risk borrowers is not the only potential cause of a new financial crisis. Indeed, the sovereign debt crisis in Europe and unconventional monetary policies have been said to be a major potential threat to financial recovery and stability in the Western World. Besides the United States and the European Union, many other countries have adopted new financial regulations in the aftermath of the crisis. The European Central Bank, which aims to be the central bank of all national central banks in the Euro-area, has played an active role as banking authority in the aftermath of the Global Financial Crisis.
