This intertwining of the communication of the European monetary team with the European and national institutions and the full body of the civil societies is currently underestimated. Wim DUISENBERG attends hearings at the European Parliament in Brussels as often as Alan GREENSPAN does on the Hill in Washington. Each national governor explains in his own language (so in total in ten languages), through the lens of twelve different cultures the same message from the  2  BIS Review 11/2001  Eurosystem. To improve its transparency and its communication even further, the Eurosystem decided to publish for the first time in December 2000 Staff Economic Projections for the euro area. In terms of transparency and accountability—namely the duty to explain, justify, whenever possible convince, and in any case, being fully responsible vis-à-vis public opinion for decisions taken- I think that the Eurosystem meets the best practices of the main central banks in the world. I.2. Co-ordination of economic policies A few years ago, it was necessary to convince a great number of skeptical people, in Europe as well as in the rest of the world, that the euro was really to be set up. Many observers pointed to its presumed contradictions and alleged inconsistencies: claiming, for example, that the economic divergences and structural gaps among euro-area countries would be too large to ensure a viable monetary union or that the lack of co-ordination between economic policies would deprive the area of an appropriate policy-mix, and could not be achieved without a political federation.
As a matter of fact, monetary policy alone cannot ensure price stability without the appropriate fiscal discipline at the overall EMU level. Indeed, for my part, I would mention three economic justifications for the Treaty provisions that gave rise to the Stability and Growth Pact: •  First, by co-ordinating the fiscal policies of the Member States of Monetary Union, the pact ensures a good policy mix within the Euro area. This is essential for monetary policy, to counterbalance the fact that Europe does not have a significant federal budget, just as it has no federal government. Close mutual surveillance and co-ordination of fiscal policies are the  BIS Review 11/2001  3  responsibility of the "Euro Group" and of the Ecofin Council. Adherence to the medium-term objective of achieving budgets that are "close to balance or in surplus" means that individual countries must first rely on themselves to withstand possible economic downturns which affect only their own economy, while ensuring a balanced policy mix throughout the euro zone. •  Second, the pact helps to prevent well-managed economies from having to bear an unjustified risk premium by setting up a penalty system for excessive deficits. •  And lastly, the stability and growth pact allows us to disprove the assertion that the euro area has no automatic stabilisers in the event of asymmetric shocks to a member economy.