Effective regulation has a key role to play in strengthening the financial system in the longer term. Preventing imbalances The experience of imbalances in the euro area in recent years, and the difficulties this has bequeathed, are convincing reminders that “prevention is better than cure”.
The economic governance framework at the EU level has not performed this function effectively, and there is an urgent need to reinforce economic governance to arrest the build-up of imbalances at a sufficiently early stage. To this end, EU governments have agreed on a number of proposals to strengthen economic governance in the EU and the euro area.