For this reason, both when the SMP was first announced in May 2010 and when its active implementation was confirmed in August 2011, the ECB took special note of the commitments of euro area governments to ensure the sustainability of their public finances and address the shortcomings of economic governance in the euro area. Fiscal imbalances, governance in a Monetary Union and sovereign contagion It is clear that a lasting solution to the current sovereign debt crisis requires making swift progress in the consolidation of public finances, the boosting of sustainable economic growth and the strengthening of the governance framework at the euro area level – to which I will now turn. The fiscal situation in euro area countries deteriorated significantly following the financial crisis.10 In 2010, the aggregate fiscal balance of the euro area stood at more than 6% of GDP, up from an almost balanced budget in 2000. The latest projections by the European Commission suggest that the euro area deficit ratio would gradually decline to around 3½% of GDP in 2012. Euro area debt amounted to more than 85% of GDP in 2010 and would increase to around 90% of GDP in 2012. Moreover, 14 out of 17 euro area countries are currently facing an excessive deficit procedure related to a budgetary deficit above the 3% of GDP reference value. To be sure, the fiscal situation in the aftermath of the crisis is even worse in other major economies.
José Manuel González-Páramo: Sovereign contagion in Europe Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the Distinguished Speaker Seminar of the European Economics and Financial Centre, London, 25 November 2011. *  *  *  Ladies and Gentlemen, It is a great pleasure to speak to you here in London and discuss some key issues relating to the ongoing crisis in Europe. For centuries the City of London has held its position as a leading international financial centre. Few other places in the world exhibit such a high density of expertise in financial matters. At the same time, where financial activity tends to be concentrated experiences with financial contagion during crises are often also pronounced.