In this respect, the prospects for the world economy are highly favourable. The European stability consensus aims at underpinning price stability with an equally stability-oriented fiscal policy. EU governments therefore agreed on the European Stability and Growth Pact. The idea of the Pact is to not only to promote stability by preventing the emergence of conflicts between monetary policy and fiscal policies.
Resolving a large, multinational financial firm safely will likely always be a difficult challenge, and a great deal of work remains to be done to make these new authorities fully effective. Ultimately, though, these changes will mitigate moral hazard in our financial system by reducing expectations of government support by the creditors and counterparties of large firms.