, this raises concerns about whether back - loading might become the new standard of fiscal efforts. i am concerned that such a fiscal framework would fail to contribute to a reliable reduction of high sovereign debt levels. and this would be a burden for our monetary policy and would leave us feeling exposed when it comes to dealing with future economic shocks. however, the discussion on reforming the common fiscal framework is still ongoing between the commission and the member states. and similar concerns have been raised, not least by the german finance minister christian lindner. so we have to wait for the final agreement. in the end, the specific design of the rules and, equally importantly, their implementation, will determine the outcome. 6. perspectives of the european monetary union now you may ask : what's next for the euro area? well, unless there is democratic legitimacy for a european political union, the future of the european monetary union relies on strengthening the existing governance framework. in general, progress has been made in resolving the well - known drawbacks. the european stability mechanism – esm – was established to provide financial assistance if necessary. a macroeconomic imbalance procedure has been introduced, and reforms have been implemented to mitigate the mutual reinforcement of problems in the financial sector and public finances. in particular, the single supervisory mechanism and the single resolution mechanism are designed to forestall financial distress in the banking system. however, further reform progress is needed to contain any detrimental impact of distortions from the government to the banking system. ultimately, however, each member state remains responsible for its fiscal and economic policy. as regards the fiscal governance framework, fiscal rules should become less complex, less discretionary and more binding. in my view, however, fiscal rules alone cannot ensure, together with monetary policy, price stability. that means financial markets have to play their part by pricing sovereign risks adequately and thereby support fiscal discipline. borrowing at european union level to finance current expenditure, such as with next generation european union transfers, should remain an exception. this guarantees that potentially rising risk premia for government debt constitute a significant incentive for sound fiscal policy. capital market disciplining would be helpful in this respect. the debt ratio in the euro area increased rapidly during the pandemic. politicians have to find a proper way to bring it down. sustainable public finances secure capital market access and avoid potential conflicts with monetary policy. i hope the current reform of the governance framework will not culminate in a rules - free setting. sustainable public finances are in

the interest of taxpayers as well as fiscal authorities and central banks. 7. closing remarks ladies and gentlemen, 6 / 7 bis - central bankers'speeches let me conclude. from a central banker's perspective, fiscal rules are indeed very important. the economist karl brunner expressed this with the following words : " the crucial conclusion from [ - ] stability analysis suggests that a stable, non - inflationary monetary regime is unlikely to persist in the absence of a fiscal regime effectively containing the average deficit. " 3 in this context, the direction of the current reform process causes me concern. we will see whether the answers to questions still under discussion will improve the outcome. and we will see how any new rules will actually be implemented. in my view, the european union weathered the crises of the last few years fairly well. the eu countries reacted responsibly and successfully to the economic shocks caused by the pandemic and energy crisis. certainly, we would not have been better off during the crisis had we been dealing with twenty different european currencies. working together to find a common european response is worth the effort. i am firmly convinced that monetary union is beneficial to all members. thank you. 1 tucker, p. ( 2018 ), unelected power : the quest for legitimacy in central banking and the regulatory state, princeton, p. 525. 2 woodford, m. ( 2001 ), fiscal requirements for price stability, journal of money, credit and banking, vol. 33, no. 3, pp. 669 - 728 3 brunner, k., fiscal policy in macro theory : a survey and evaluation. in the monetary versus fiscal policy debate, edited by r. w. hafer and n. j. totowa : rowman and allanheld, 1986. 7 / 7 bis - central bankers'speeches