However, the influence on bank behavior of the direct market discipline exercised by depositors, other creditors, and shareholders, is often limited either because these stakeholders lack sufficiently strong incentives or because, in some cases, the interests of the different stakeholders do not coincide. In particular, the actual or presumed existence of public safety nets may dampen the incentives of depositors to exercise discipline.
That is to say, if in times of economic fortune Member States establish sound fiscal positions, they will have sufficient budgetary room to react adequately to economic downturns. In this respect, the pact for stability and growth is nothing more than the communal equivalence of the Dutch saying ”Save first, spend later”. Thus, budgetary flexibility is explicitly part of the pact.