3.3  Economic governance in the euro area needs reform  Since the fiscal stabilisation measures in favour of euro-area peripheral countries have undermined the basic principles of EMU, it is obvious that there has to be a fundamental and far reaching reform of economic governance in the euro area.
The European leaders agreed that the fiscal rules have to be tightened since their application in practice had proven to be too weak. They agreed, secondly, that macroeconomic imbalances should be addressed earlier and more effectively. The crisis demonstrated that sound public finances are a necessary, but not sufficient condition for financial and economic stability.