For example, the inflation-overshooting commitment is more powerful than any previous forward guidance and is unprecedented; yet, at the same time it is firmly grounded in economic theories regarding inflation expectation formation developed in recent years. On the other hand, because central banks confront a constantly changing world, in practice, they often face difficulties that cannot be explained by existing theories.
The set of rules did not prevent the member states from making the errors I mentioned. Implementation of the fiscal rules was too lax. Moreover, the fiscal rules of the Stability and Growth Pact were, in effect, relaxed some two years before the financial crisis broke out in 2007, following a strident campaign by Germany and France to make the pact “smarter”.