Any weakening of the elements of the Stability and Growth Pact would raise concerns about the credibility of EMU and could erode the confidence in the stability-oriented policy framework of the euro area. 2  BIS Review 46/2002  4)  Structural Policies  Structural reform is the third pillar of success for Europe's monetary union, especially in the longer term.
Structural reform is needed both for its indirect effects on monetary policy via the budget, and for the direct impact it has on the competitiveness of the euro area. Competitiveness includes increasing the flexibility of the labor market, creating a more efficient tax system that encourages job creation, and reducing the overall tax burden on the economy.