When, around 2005, the signs of imbalances and divergences in key nominal developments, in particular in prices, costs and wages, started to accumulate significantly, the Governing Council sent the first analysis to the Eurogroup. The focus was on price and cost developments in individual countries; the message was one of divergence that warranted interpretation, assessment and policy action.
Going forward, how can we promote the proper assignment and management of risk? In answering these questions, we should keep in mind two principles of effective risk management. First, it's important to be clear about who bears the consequences of a risk and, by implication, who owns that risk. The party that owns the risk needs to have the proper incentives to manage it.