, when the latter materialises. banks should use the substantial profits they obtained in 2009, in particular through trading activities, to strengthen their capital position rather than to remunerate their shareholders and their managers. this policy is not only preferable over the medium term ; it is also more ethical. indeed, it does not appear appropriate under the current circumstances that banks use the profits stemming from the direct or indirect support of public policies, be they fiscal or monetary, for remuneration purposes. this applies not only to those banks that have received direct public support, but also to those that did not. in fact, without the support for some of the weaker banks, those that claimed to be stronger would have succumbed as well. furthermore, these banks are benefiting from very easy liquidity conditions, which have allowed them to be profitable. to sum up, even for the banks that look healthier, their profits are the result of public interventions and should thus be used to bolster their capital position rather than for remuneration purposes. there is still a lot of work to be done, in several countries, including in the euro area, to ensure that banks are sufficiently equipped to support the real economy as it recovers. this work is urgent and cannot be delayed in the expectation that other policies will bear the burden. the experience of the past, particularly the case of japan in the 1990s, has shown the dangers of underestimating the problem. this brings me to the second question. monetary and fiscal policies have successfully averted a collapse in economic activity. this success may now create the illusion that monetary and fiscal policies will be able by themselves to restore economic activity to its precrisis level. why is it an illusion? as i said earlier, the pre - crisis situation was not in equilibrium, in particular because of the excessive level of private indebtedness. if monetary and fiscal policies aimed at reestablishing that situation, especially by replacing private debt with public debt, they would themselves become unsustainable. it is already widely expected that most advanced countries will come out of the crisis with higher public debt, and with higher payments to be made on that debt through higher public revenues. the sustainability of the debt depends on the ability of governments to withdraw their very expansionary fiscal policies in a timely way. the only way to get the economy back on a path of sustainable growth is to improve the growth potential of the economy through profound structural reforms. there are still huge in

medium term fiscal positions close to balance or in surplus and ensure that they do not breach at any time the ceiling on the fiscal deficit of 3 % of gdp. it is the governing council's view that these rules are indispensable for economic and monetary union and are also in the interest of the member states. the stability and growth pact has been successful in promoting sound public finances in the euro area. as a result, 8 of the 12 euro area countries have reached budget positions which are " close to balance or in surplus ", a development which has helped to support the maintenance of price stability and growth in employment and real gdp. these 8 countries are now in a position to let the automatic stabilisers work in full, as envisaged by the pact. the other 4 countries still have to make progress to achieve the medium - term requirements of the pact. these countries now need a credible consolidation policy that will be supportive to the outlook for economic growth, as direct short - term effects on demand should be counteracted by a higher credibility for the conduct of fiscal policy, boosting confidence and thus private spending. in this regard, the full implementation of the stability and growth pact is particularly important at the current juncture. in this same vein, the euro area should implement the reforms needed to reduce the structural rigidities in its labour and goods markets. this would not only increase trend potential growth over the medium term, but also make the euro area economy more resilient to economic shocks. under the current circumstances, rapid and decisive action would be a very important contribution to support confidence in the euro area. thank you.