We need to maintain our credentials as deflation fighters as much as inflation fighters by showing clear and unequivocal commitment to overcoming deflation; should these credentials be lost, experience suggests that they are extremely difficult to regain. Furthermore, it is crucial that we show a ‘‘whatever-it-takes’’ stance to prevent inflation expectations from falling in the face of negative shocks.
Rather, based on a diagnosis of how the crisis came about, I would like to stress that, if EMU is not given sound foundations allowing it to function better in the future, the objectives of equity and redistribution will become self-defeating because there will be much less available to distribute. 2.