Much has already been done by way of strengthening fiscal and macroeconomic governance of the euro area. In EU jargon we talk about the “six-pack” and the “two-pack”, of which the former entered into force already in December 2011, and on the latter a final agreement was reached just last week (“trilogue agreement” on 20 February). These packages of legislation included the reform of both the preventive and corrective arms of the Stability and Growth Pact (SGP), the new minimum requirements for national budgetary frameworks, the new Macroeconomic Imbalance Procedure (MIP), and a stronger enforcement mechanism through new financial sanctions, under both the SGP and the MIP. The two additional regulations that are just about to be adopted will further strengthen surveillance of euro area countries. Rather than talk about what has already been achieved I would like to sketch out the further improvements that are in the pipeline, in particular in the area of financial regulation and supervision. One of the structural flaws that exacerbated the crisis was that supervisory policies often failed to prevent excessive risk-taking in the financial sector. Supervisory decisions at the national level did not always take their potential effect across national borders into account. More fundamentally, supervisory decisions were “microeconomic” in nature, concentrating on the financial health of individual institutions rather than on systemic impact at the “macroeconomic” level.
The same expectation was expressed in the European Commission’s Winter Forecast released on Friday last week. These somewhat better prospects are primarily due to policy changes in the field of fiscal and structural policies at the national level as well as in the European Union. For sure, the ECB’s monetary policy has contributed to the process by maintaining an accommodative monetary policy stance and by fostering improved financial market confidence. As host of both the ESRB and soon also the SSM, the ECB is committed to playing a positive role in the further development of the euro area as a well-structured and stability-oriented part of the global economy. We call on the euro area’s governments to keep up the efforts to undertake still necessary reforms, while acknowledging what has already been achieved. Adjustment of such a magnitude as was needed to address the crisis is a long haul, and I am confident that we are on the right track to get there. Thank you very much for your attention. BIS central bankers’ speeches  7