task. just as economic conditions can differ, so can driving conditions. but you cannot have speed limits that are constantly changing to suit all conditions. and you cannot have different speed limits for different drivers. the technology simply does not exist or is too expensive to put in place. and the driver as well as the traffic authorities would, in any case, become confused. speed limits need to be clear and enforceable. and you have to rely on the authorities to implement them in a way that makes good sense. in my view, the same is broadly true of fiscal rules in a monetary union. you need fiscal rules that are clear and enforceable, rules that are the same for everybody and understood by all. fiscal rules such as those contained in the pact cannot be optimal at all times. but this does not mean they are bad rules. it means that those responsible for law enforcement, in this case the commission and the ecofin council, have to implement them appropriately in the light of experience gained. recent experience has taught us that there is room for improvement in the implementation of the rules. we know, for example, that the current problems are partly due to the fact that governments failed to strengthen their public finances during periods of robust growth. so it would help to strengthen incentives for fiscal consolidation in good times. we also know that fiscal surveillance has been complicated by the difficulty of identifying underlying budgetary trends as well as by the quality of budgetary data and the - sometimes rather “ flexible ” - application of accounting rules. it would therefore help if we could improve our analysis of structural budget balances, the credibility of fiscal figures, and the effectiveness of the monitoring and auditing process. all such improvements, however, can be made within the current framework. they do not call for the eu fiscal framework itself to be abolished or re - written. ladies and gentlemen, i have perhaps spoken for too long. but you did invite me to speak on a subject that is of crucial importance and that central bankers are passionate about. some say that there is nothing a central banker likes more than to talk about fiscal policy. i think i have lent weight to that statement this evening. fortunately for me, members of the accounting profession are known for their long concentration spans and for their patience. you have certainly been an attentive and patient audience. i will not test your patience any further. thank you.

of maintaining price stability in the euro area? obviously i think there are grounds for concern, for the reasons i just mentioned. but i also don ’ t want to exaggerate. we should not be alarmist. we should maintain a reasonable perspective. following the ecofin decision of last november, many observers promptly proclaimed the pact to be dead. i do not agree with this fatalistic view. the ecofin council did not kill the pact or even suspend its basic rules last november. what it did do was to give france and germany an extra year to adjust their fiscal policies in view of the commitments made by these countries. and in order to do so it decided to put one step of the excessive deficit procedures for these countries on hold pending the fulfilment of their commitments. if the pact is dead, then why have so many people been talking about it so much in recent weeks and months? to paraphrase one of ireland ’ s famous literary geniuses, oscar wilde, i would say that “ reports of the death of the pact are wildly exaggerated ”. the pact is not dead. it is growing up. it is making the transition from being a set of rules on paper to a set of rules applied in the real world. as is often the case when growing up, there are growing pains from time to time. moreover, while the pact may be experiencing a few growing pains, it still represents an improvement on the past. at present the euro area fiscal deficit stands at just under 3 % of gdp. ten years ago, at a similar point in the economic cycle, it was around 6 %. the pact may not be working as well as we would like, but this does not mean that it has been a failure. by being there, it has had some impact. we should give the rules and procedures of the maastricht treaty and the pact due credit for this. we should also be reassured by the fact that the euro area has a strong monetary constitution. it has an independent central bank with a clear objective to maintain price stability. monetary financing of budget deficits and the bailing - out of insolvent governments are prohibited. in short, monetary policy in the euro area is protected more than any other against the possible negative implications of unsound fiscal policies. i say this because i want to make one point clear. if the governing council of the ecb expresses its concern about fiscal developments and the implementation of the stability and growth pact, it