by the middle of next year. in this environment, the bank judges it appropriate to maintain the considerable monetary stimulus in place. this stimulus has been further enhanced by the sharp fall in global riskfree yields, which is providing further support to the canadian economy through our wellfunctioning financial system. the bank will continue to monitor carefully economic and financial developments in the canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term. in a perfect world, there would be no further shocks, and those that have hit us would have precisely the effects that we anticipate. then again, in a perfect world, these shocks wouldn ’ t have happened in the first place. we make monetary policy in the real world, where shocks are a fact of life. that is why the bank responds with a flexible approach, taking decisions guided by considered analysis and informed judgment rather than mechanical rules. it is our job to anticipate potential shocks, analyse their impact on economic activity and inflation in canada, and set monetary policy consistent with achieving the 2 per cent inflation target over time. this ultimately remains the best contribution that monetary policy can make to the economic well - being of canadians. bis central bankers ’ speeches

is not primarily because we fear the implications for price stability. we have the tools at our disposal to fulfil our objective. european citizens and business can rest assured that the ecb will continue to maintain price stability over the medium term. this is not what we are worried about. our concern is that if the stability and growth pact is not implemented properly, and if excessive deficits persist and public debt levels remain high or, even worse, increase, there will eventually and inevitably be a cost in terms of lower growth and employment. what should be done? if the stability and growth pact is not working as well as we would like, what can be done about it? what should be done in view of the ecofin council decision of last november? well, first of all, having made the commitments they did last november, france and germany must keep their word. and if they cannot do so, the ecofin council should keep its word and apply the next steps of the excessive deficit procedure. abiding by the commitments made last november would, in my view, go a long way to restoring confidence. we at the ecb think that the decision taken last november was not the appropriate one. france and germany and the ecofin council can prove us wrong. and in this case i for one will be happy if i am proved wrong. beyond this, the question that seems to be on everyone ’ s mind at the moment is whether the recent problems in implementing the rules and procedures of the pact call for the pact itself to be changed. my colleagues in the governing council and i are not convinced that this is either necessary or desirable. the current rules of the pact have been agreed upon by all 15 eu member states, because they make good economic sense. just because you encounter problems here and there when you first try to apply the rules does not mean that you should re - write the rulebook. let me illustrate my views by drawing a comparison with the highway code. we all know that driving at excessive speed is dangerous. so for good reason, governments have introduced speed limits. we also know that speed limits have not eliminated speeding completely. some drivers continue to speed. but this does not mean that you should abolish or revise the speed limits. it means that you still have a job to do in educating drivers about the dangers of speeding and in better enforcing the speed limits. as in the case of fiscal rules, identifying the optimal speed limit under all circumstances is a highly complex