##ing time and again why we are very much in agreement with the european parliament on this – the need for a quantum leap in economic governance through the currently discussed legislative package. at this stage, i would like to recall two points : first, we should not be content with a stronger stability and growth pact only at the later stages of an excessive deficit procedure. we need to halt any fiscal excesses early on and correct them. the obvious way is a higher degree of automaticity early on in the procedures, that is, more reverse qualified majority voting in the preventive arm of the pact ; and therefore the prospect of more timely sanctions, possibly of a reputational nature. second, we would benefit considerably from an equally ambitious macroeconomic imbalances framework that detects imbalances early on, through a well focused and rigorously applied scoreboard ; and then corrects them, again in a timely fashion. here, we need to focus on those countries that ultimately pose a risk to other euro area countries through in particular persistent and excessive competitiveness losses. iii. sovereign debt developments let me now turn to the current sovereign debt developments. as you know, at the euro area level, we see that fiscal consolidation in many countries is ongoing, and will, according to the european commission ’ s spring 2011 forecast, bring the euro area general government deficit down to 3. 5 % by 2012. this is an encouraging prospect, especially by international comparison. also for the current year the euro area fiscal deficit is somewhat less than half of that of the us and japan. however, selected euro area countries are currently still facing high debt and deficit levels. the ecb has always made clear that the best way to cope with the current sovereign debt positions is a determined and disciplined implementation of agreed fiscal consolidation paths and the structural reform agenda to promote medium term growth. for the euro area countries under an eu / imf programme, a determined implementation of those programmes is of utmost importance to get back to a sound economic situation. this call has been echoed by the european council, which at its recent meeting urged the national authorities, especially but not only in greece, to continue implementing rigorously and with the highest resolve the necessary adjustment efforts to put the country on a sustainable path. to that end, national unity and cross - party consensus are essential. as to the possibility of debt action, let me recall what i have said many times on this matter, on behalf of the governing council : we strongly advise against all concepts that

are not purely voluntary or that have elements of compulsion. we call for the avoidance of any credit events and selection default or default. let me add that i am from time to time surprised by the narrow view of private sector involvement that is generally taken in the present debate. we should not forget that private capital is also mobilised when embarking on privatisation. privatisation is a good way of mobilising private capital and is something that we have encouraged considerably, particularly in the case of greece. it is an effective way of mobilising private capital and has positive consequences not only on the financing of the country, but also in terms of positive structural effects on growth and employment. finally, the private sector involvement that everybody is aiming at is to go back as soon as possible to private sector market financing. thank you for your attention. bis central bankers ’ speeches