for developments in the global financial markets. here i shall briefly mention a few. first, what will constitute the new normal for monetary policy is far from obvious. recent pronouncements by leading central bankers have hardly provided much light in this respect, reflecting, in part, the fear that clarity will result in further market " tantrums ". more fundamentally, although i would stop short at la12 belling this, like the financial times, a " crisis of confidence " for central banks, there is a need for a frank discussion on the robustness of the models used to guide monetary policy decisions. in particular, whether the long - standing reliance on the philips curve paradigm is still justified ; but also the need to effectively integrate financial indicators into the modeling process. second, the role of fiscal policy requires careful consideration. at least with hindsight, it does seem that there is a strong case that the retreat to unswerving fiscal austerity added to the negative impact of the 2007 - 08 global crisis. however, the underlying reasons for fiscal caution still resonate. this dilemma was well summarised in the recent communique from the imf, which noted that " fiscal policy should be used flexibly and be growth - friendly, while enhancing resilience, avoiding procyclicality, and ensuring that public debt as a share of gross domestic product is on a sustainable path ". this is a tricky combination of requirements to meet simultaneously. in terms of major policy issues, the need for financial sector reforms and smart regulation is also significant. at the epicentre of the global financial crisis were deregulation, weaknesses in banking system governance structures and erosion of fiduciary responsibility and trust. the lesson to be learned, in this regard, is that strong micro - foundations of a financial system, es13 pecially banks, are of crucial importance at both national and international levels. that is why, for example, the financial stability board was established ; banking supervisory and regulatory regimes strengthened in many jurisdictions ; and capital adequacy and liquidity requirements extensively reviewed. but, as i indicated earlier, the financial stability board recognises that, while the policy design is nearly complete and the new rule books are in place, this is not sufficient. hence, it is necessary to now turn towards effective implementation. in the context of an integrated and globalised financial system, this requires effective coordination, collaboration and communication, not only among the 24 member jurisdictions of the

decision - making process. if done correctly and with the necessary commitment on behalf of the member states, european leaders should be able to manage a revival of the lisbon agenda comparable to that achieved a decade ago on emu. structural reforms will have enormous benefits for the citizens of the euro area. these reforms are crucial for sustained noninflationary growth and employment, and they are therefore also important for maintaining social cohesion in the long run. confidence among european citizens in the future is vital for a stronger economic recovery and stable growth. the continued low level of consumer confidence is also related to uncertainties about the appropriate path for structural reforms in many euro area countries. further progress in the implementation of necessary structural reforms is key to stronger confidence, and such reforms create the conditions for consumption and investment, for growth and job creation. let me emphasize a few points which in my opinion are crucial now to a successful revival of the lisbon agenda. • a first message is : enough talk, now is the time for action! the necessary reform areas have been sufficiently discussed and have been clearly identified. we do not need more reform papers now, we need implementation. • a second message is : set clear priorities and use intelligent sequencing! otherwise both politicians and electorates will simply be overwhelmed and discouraged. • a third message is : create clear responsibilities! it is not sufficient for european leaders to issue declarations and conclusions on what “ the community ” needs to do. we need a binding commitment by each member state on the concrete reform steps that it will implement until 2010. the maastricht convergence criteria would probably never have been fulfilled if there had only been reliance on a general intention that the community requires price stability, sound public finances and the like. you need to break objectives down to the national level and create incentives to ensure implementation. • a fourth message is : talk to people and get them actively involved! i think a major obstacle to implementation of the lisbon agenda by the various governments is a lack of communication with the public. it is thus not surprising that it seems to be rather difficult for people to accept the reforms. thus, each member state government needs to convince its citizens of the enormous potential and opportunities released by structural reforms. after all, what we aim for is higher per capita income, replacing redundant activities with more welfare - generating ones, investment in skills and education, a knowledge - based society, more innovation and sufficient research and development. i would think that these objectives are of such a genuinely positive