In the second half of the 1990s, there was a significant improvement in the fiscal position of general government in the member states of the euro area. The average deficit ratio in the euro area initially continued to go down, as did the government debt-to-GDP ratio.
Long-run price stability certainly is essential for achieving maximum employment. However, I would like to underscore some often-overlooked benefits related to the development of markets for long-term bonds. Price stability boosts growth by deepening financial markets. Given stable prices, savers and investors have more confidence about the ultimate value of their investments and are more willing to enter longterm financial contracts.