In other words the central bank needs some flexibility (or if you prefer “discretion”) in the sense that there is no possibility of it committing itself to a fully specified reaction function. 4  BIS Review 22/2004  III.
The EMU fiscal policy framework  The debate about rules also applies to fiscal policy in the euro area, but the relevant arguments and conclusions are not the same. Indeed, some rules are contained in the Maastricht Treaty and the Stability and Growth Pact.