The Stability and Growth Pact is at the heart of the EU’s fiscal surveillance. It is no exaggeration to say that this surveillance has not been satisfactory when it comes to Greece. The outcome remains to be seen. *** It is encouraging to see that the normalisation of the international financial markets has made great headway.
And on the monetary side, the successful completion of the last stage on the long path to price stability during the 1990s allowed substantial easing in response to the downturn. As policymakers stressed repeatedly, the prevalence of low- and wellanchored inflation expectations ultimately facilitates pursuit of such countercyclical policy.