It is already largely at the European Union level, particularly with the concept introduced by Tommaso Padoa-Schioppa of the “single rulebook” for the 27 Member States, which is based on the principle of maximum harmonization coupled with a wider use of directly applicable regulations. Accordingly, what is now at stake in forming a Banking Union goes much further.
The long term interest rates are influenced significantly by the yields on government securities and hence on the size of the government borrowing programme, thereby eroding to some extent the efficacy of monetary transmission. The credibility of the Reserve Bank’s inflation management, therefore, is critically dependent on the credibility of Government’s fiscal consolidation. 27.