the very strong monetary and credit growth in an environment of already ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability prevail over the medium to longer term. hence, very close monitoring of all developments is of the essence in order to ensure that risks to price stability over the medium term do not materialise. this will permit medium to longer - term inflation expectations in the euro area to remain solidly anchored at levels consistent with price stability. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term is warranted. as regards fiscal policy, almost all euro area countries have submitted their updated stability programmes. while these programmes generally indicate that governments plan to proceed towards sound budgetary positions, there are also indications that budget targets do not consistently imply sufficient consolidation and that concrete and credible measures have not yet been specified in all programmes. these indications are a cause of concern and entail risks for the future. against the background of current good times, it is essential that sound budgetary positions are reached in countries with fiscal imbalances and that a pro - cyclical loosening is avoided in all member countries. moreover, countries need to improve the quality of their tax and expenditure policies as part of a comprehensive medium - term strategy, so as to strengthen confidence in a growth and employmentfriendly, and sustainable, fiscal policy environment. with regard to structural reforms, over recent years euro area countries have become increasingly aware of the necessity to adjust to the challenges of increased global competition, ageing populations and accelerating technological change. in response, some have undertaken reform efforts to create more job opportunities. both as a reflection of these reforms and as a result of wage moderation in some countries, the euro area has seen a remarkable dynamism in employment growth over the recent period. notably, around 12 million new jobs were created in the euro area in the eight - year period since the start of stage three of emu. this compares favourably with the little more than two million new jobs created in the same group of countries in the eight years before 1999. however, the governing council notes that significant structural impediments continue to exist and contribute to explaining why unemployment rates are still unacceptably high and participation in the labour market is still low by international standards. with other countries in the world also increasing the competitiveness of their markets, it is essential for

on all of these. there should be binding rules for the cooperation of member states, and measures should be activated according to clear and transparent – although not automatic and not solely quantitative - based – triggers. indeed, the resolution of a cross - border systemically important financial institution would probably be most efficient if the measures were at least strongly coordinated by one lead authority. or, if we go a step further in our thinking, the ultimate long - term vision could be to establish one supranational authority, an fdic - type entity implementing group resolution. clearly, at the international level, this now seems to be out of reach, but one could ask whether at least in the eu such an arrangement might be feasible sometime in the future. if ever put in place, an eu - level resolution authority could act as a resolution authority responsible for all the major cross - border banks of the eu, working together with national authorities as its agents, operating on the basis of a single crisis management, resolution and insolvency framework for eu banks. in the field of prudential regulation, something similar is already happening, since the new basel rules will partly take the form of an eu regulation, thereby eliminating the room for national differences in transposition. in the future, the single rulebook could ultimately be one that also covers the crisis management, resolution and insolvency of banks. if we continue to unfold this vision, there would also be a need for robust arrangements to finance the measures of such an authority. an obvious option for that purpose would be an eu - level fund of resolution funds, or a single eu resolution fund. the benefits of such an integrated regime are most easily seen if we imagine how resolution under a loose cooperation framework would work. a previous mapping exercise by the ecb identified more than 40 banking groups with significant cross - border activities which were headquartered in the eu. notably, 17 of them had a presence in at least ten member states. the resolution of such a bank would involve ten national authorities, ten resolution funds and ten deposit guarantee schemes ; needless to say, there would be many challenges involved in ensuring efficient coordination. the envisaged eu authority would spare us a great deal of these efforts. and i see no reason why such a vision should be considered unrealistic. events are moving faster now than before. crises make us reconsider things that we would have seen as beyond the feasibility horizon. for example, of the challenges that i have