Monetary policy alone – however well designed and implemented – cannot solve Europe’s economic problems. National fiscal authorities can make a significant contribution to the establishment of favourable conditions for sustained economic growth and high employment in the medium to long term by conducting sound budgetary policies.
Appropriate structural  BIS Review 29/1999  6  reforms implemented by national governments that improve the flexibility and efficiency of labour and goods markets are of utmost importance. An increase in the flexibility of labour and goods markets would certainly also help to lessen the impact of shocks, regardless of their nature.