However, it suffered from weak national implementation and a lack of enforcement at the European level. Enforcement of the SGP was built on a peer pressure mechanism among Member States. In the past, however, Member States proved to be reluctant to enforce adequate fiscal discipline on their peers. Moreover, decision-making bodies at the EU level were left with a  10  See A. van Riet (ed., 2010), “Euro area fiscal policies and the crisis”, ECB Occasional Paper, no. 109, April (http://www.ecb.europa.eu/pub/pdf/scpops/ecbocp109.pdf). 6  BIS central bankers’ speeches  significant degree of discretion regarding the implementation of the fiscal rules, notably following the 2005 reform.11 Incentives for ensuring sound national fiscal positions have as a consequence been insufficient. Member States failed to adhere to their medium-term budgetary objectives and only slowly corrected excessive deficits. As a result, a number of euro area countries accumulated large fiscal imbalances already in “good times”, instead of using opportunities for reducing public deficits and debt levels. Therefore, they were left with hardly any room for manoeuvre when the financial and economic crisis hit. In the wake of the crisis, the substantial underlying fiscal and structural weaknesses in a number of euro area countries, as well as the inability of the current governance framework to prevent the emergence of such imbalances, became very apparent.
With further reduction in NPLs and higher interest rates, there are better prospects for banks’ profitability. We see demons of the past in our region today and we wish to avoid any doubting of our European and Transatlantic engagements. In order to go further we must prevent the demons of the past from questioning the virtues of opening our economy to foreign investment. The only way to preserve this fine moment for Romania is to steer and balance the economic growth, to advance on our European path and grasp the benefits of this historical process. I will now give the floor to Mr. Jeffrey Franks who will deliver an in-depth presentation on the first chapter of the report – “Europe Hitting Its Stride”, accompanied by his discussant, Deputy Governor Liviu Voinea. I wish you all a fruitful debate today! 2/2  BIS central bankers' speeches