Crisis control and mitigation
Financial assistance by home countries to their financial institutions may have potentially disrupting spillover effects. It must be ensured that financial rescues attain their objectives with minimal competition distortions and negative spillovers. The coordinated response put in place in the autumn of 2008 in the face of the risk of financial meltdown shows that EU policymakers became fully aware of the need for a joint strategy. The need for deeper policy coordination and improved cross-border crisis management is a key lesson learnt from the recent crisis. Fiscal stimulus also has cross-border spillover effects, through trade and financial markets. Spillover effects are even stronger in the euro area in the absence of exchange rate offsets. The need for a fiscal boost underpinned the adoption of the Enforcement and Emergency Response Program (EERP) in December 2008. Moreover, the activation and strengthening of the EC Balanceof-payment Facility helped to provide stability in Central and Eastern Europe.