euro area. not only can they improve the flexibility and integration of labour, product, including services, and financial markets, but they can also conduct a well - designed fiscal policy. as i have stressed on many occasions, the best contribution fiscal policy can make to the proper functioning of the euro area is by being sustainable and medium - term oriented, fully in line with the orientations provided by the stability and growth pact. moreover fiscal policy can and should also help mitigate undesirable trend growth differentials through “ high quality ” expenditure and tax policies. in particular, high and inefficient public expenditure can put a brake on economic activity by imposing a high tax burden on the economy and channelling resources into unproductive uses. let me take the opportunity to stress that the governing council of the ecb welcomes the recent commitment by the euro area finance ministers at the eurogroup meeting here in berlin on 20april. all euro area finance ministers then committed to making full use of the current economic growth and better than expected tax revenues to pursue sound fiscal policies and to avoid procyclical policies in line with the provisions of the stability and growth pact. in the view of the governing council, this requires a rigorous implementation of 2007 budgets, the avoidance of expenditure overruns and the allocation of unexpected extra revenues to deficit and debt reduction. for 2008, countries with remaining fiscal imbalances are expected to pursue more ambitious than currently planned budgetary targets. this would allow euro area countries not only to meet their commitments but also to prepare themselves for less favourable economic conditions and the rising fiscal burden in the longer run associated with population ageing. in this context, the gradual increase of the pension age in germany is an important step in the right direction. it will help to reduce the large ageing - related fiscal burden on the active and younger generations. let me finally mention the important issue of competitiveness. one of the most important marketbased adjustment mechanisms in a monetary union works via changes in competitiveness. 16 simply put, competitiveness is the ability of an economy to compete in international markets. this ability to compete is usually assessed on the basis of various measures of cost and price competitiveness 17, complemented by accounting for some “ non - price ” factors, such as the quality and the technological content of the goods produced. economic adjustment via the competitiveness channel works as follows. assume, for example, that a country or a sector in a monetary union experiences an increase

amando m tetangco, jr : sustaining the economy ’ s growth saga through the 3ps of policymaking – proactive, pre - emptive, and prudent speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the euromoney philippines investment forum, manila, 24 march 2015. * * * i see from the conference agenda that you have already covered critical topics this morning. our place in the asean economic community, our prospects in the mass market and our infrastructure are certainly key issues for the philippines today. before you take on capital market issues and the rest of the forum topics, i thought it would help in the discussion of these sectoral issues, if i would spend the time allotted to me to speak on the broader economy that we operate in. in particular, i would like to speak briefly on the risks to the macroeconomy that the bsp sees in the horizon, and how we, from a monetary and banking policy framework, intend to address these. first, the risks : the risks we face come mainly from the external side. here i mean the interplay of three key factors : ( 1 ) the uneven global economic growth ; ( 2 ) the uncertainty of the oil price path and the ambiguity of the underlying drivers of the oil price decline ; and ( 3 ) the resulting divergence in monetary policy stance among major advanced economies. in the last year and a half, these factors have manifested themselves in the movement of global capital into us assets ( away from core europe and emerging markets ), an appreciating trend in the us dollar and a decline in global long - term interest rates. the rebalancing in global portfolios, as funds search for better yields, has surfaced in our domestic financial markets as volatility in the peso / dollar exchange rate, and in the local bond and equity markets. going forward, should the uneven global growth scenario persist, we may see this translate into more pronounced changes in trade patterns. monetary policy thrusts : in response, the bsp has opted to use a mix of monetary policy tools over the last year. these actions included increases in reserve requirements on bank deposits, upward adjustments in policy interest rates, a strategic presence in the fx market, alongside a clear communication plan, and other macroprudential measures. the bsp did these to allow it to : 1 ) better