the most favourable and least favourable aspects of several possible strategic options in this area. see p. lane ( 2019 ), “ policy and below - target inflation ”, address delivered at the bank of finland on 2 july 2019. see chapter 3, “ monetary policy design in the medium and long term ”, in the annual report 2018, banco de espana. 10 / 16 the contribution of non - monetary economic policies is pivotal that said, the participation of non - monetary economic policies is essential for shoring up the recovery, entrenching higher growth rates and, thereby, smoothing convergence by inflation towards its medium - term reference. the need to create a fiscal stabilisation instrument in the euro area recent experience has highlighted the difficulty of achieving a more appropriate macroeconomic policy mix for the euro area as a whole under the current framework of rules and institutions in which european fiscal policy operates. in the euro area each country decides its fiscal policy. monetary policy, meanwhile, is designed taking into consideration the situation of the euro area as a whole. attaining an appropriate mix of both would require effective coordination mechanisms or the creation of a fiscal stabilisation capacity for the entire area. as regards fiscal coordination mechanisms ( based on the stability and growth pact ), there is consensus on the need for a far - reaching review. 11 sgp arrangements have become excessively complex over time, which hampers transparency in their application, their implementation and, ultimately, their fulfilment. the most evident consequence of this is, across the board, that fiscal policy design has been procyclical in numerous countries and in the euro area as a whole. in recent years, some countries running expansionary public finances are those whose high debt and structural deficits would have advised a fiscal consolidation drive. the restructuring of public finances in these countries is a priority if it is wished to count fully on fiscal policy as a national macroeconomic stabilisation instrument ahead of any potentially more adverse scenario. in such a scenario, those countries with more fiscal space might provide a greater budgetary stimulus to their economies, especially bearing in mind that they have been particularly affected by the recent slowdown as a result of their heavy exposure to international trade flows. in the current setting of very low interest rates, the positive impact of the fiscal expansion would not only be greater in the countries pursuing it ; it would also spread to the other partners, giving rise to positive spillover effects for the area as a whole. yet as i have indicated,

of international trade and is directly exposed to the uncertainty brexit is causing. both actual and projected inflation rates have held persistently below the ecb ’ s objective. against this backdrop, the ecb governing council has underscored its determination to act if the medium - term inflation outlook remains below - target, adjusting all its instruments appropriately. in parallel, improving the workings of the euro area before any future crisis should occur is a pressing concern. to achieve this, progress without delay is needed towards greater financial integration with, namely : the development of a capital markets union ; the completion of the banking union with the creation of a common deposit insurance scheme ; 15 / 16 the introduction of fiscal instruments that improve the whole of the euro area ’ s economic stabilisation capacity ; and the creation of a common safe asset. we must also achieve healthy fiscal positions at the national level. these can enable budgetary policy to fully develop its stabilising role, resolutely tackle population ageing and address the structural shortcomings hampering productivity and the generation and harnessing of investment opportunities in the euro area. lastly, macroprudential policies should be adopted when risks to financial stability are perceived and so buffers may be built up that can be used ahead of more adverse macroeconomic situations. thank you. 16 / 16