positions which are controversial and prone to manipulation2. simpler and more credible and effective rules are needed to ensure that euro area countries safeguard fiscal sustainability and build the necessary buffers to create room for countercyclical stabilisation in economic downturns. recent proposals 3 / 4 bis central bankers'speeches to focus the fiscal framework on a debt anchor complemented by an expenditure rule deserve further consideration. 3 emu also needs a central fiscal stabilisation mechanism to enhance countercyclical stabilisation during severe recessions. past experience shows that the aggregate fiscal stance in the euro area is often suboptimal. during the european debt crisis, for example, it was strongly contractionary, thereby reducing the effectiveness of an expansionary monetary policy stance. while the euro area budgetary instrument currently under discussion is a welcome step to support convergence, it is not designed to fulfil this stabilisation function. work on the fiscal architecture of emu therefore needs to continue to ensure that fiscal policies can play an effective stabilisation role. conclusion let me conclude. the euro, which celebrates its 20th anniversary this year, enjoys broad support among european citizens, with three in four people in the euro area in favour of it. its growing popularity is testimony to the fact that people have trust in the currency and in the ecb ’ s strong commitment to price stability, which supports investment and job creation. to preserve this trust, we need to step up our efforts at both national and euro area level to strengthen the architecture of the single currency. much has been achieved but some of the failings that caused and perpetuated the crisis remain unresolved. at a time of heightened global uncertainty, completing the euro area ’ s architecture is also necessary for europe to be able to achieve its other objectives. europeans won ’ t be able to foster cooperation on security and defence, or to speak with one voice on international affairs, or to complete the single market if they repeatedly have to tackle economic crises which are largely of their own making. a sound and sustainable euro area will help redirect political capital where it is most needed. thank you. 1 see the european fiscal board ’ s latest assessment of the prospective fiscal stance appropriate for the euro area, published on 25 june 2019. 2 see b. cœure ( 2018 ), “ scars that never were? potential output and slack after the crisis ”, speech at the cepii 40th anniversary conference, paris, 12 april. 3 see

jean claude trichet : hearing at the economic and monetary affairs committee of the european parliament introductory speech by mr jean claude trichet, president of the european central bank, at a hearing before the economic and monetary affairs committee of the european parliament, brussels, 7 december 2009. * * * dear madam chair, dear members of the committee on economic and monetary affairs, this is our first meeting since the entry into force of the lisbon treaty. the new treaty is a reason to celebrate : in europe generally, here at the european parliament, but also at the ecb. it will make the union stronger, more effective and more efficient. the powers and responsibilities of the european parliament increase. the ecb formally becomes an institution of the european union, and all its essential features, above all its independence, are confirmed. dans le cadre du nouveau traite, nous nous rejouissons de notre collaboration a venir avec le parlement. la qualite de cette cooperation a ete exemplaire a mes yeux au cours de ces dernieres annees. unsere heutige anhorung ist drei wichtigen themen gewidmet : erstens, unserer einschatzung der aktuellen wirtschaftlichen lage ; zweitens, unserer exit - strategie zum auslaufen der außergewohnlichen geldpolitischen maßnahmen, die wir in dem hohepunkt der krise eingefuhrt hatten ; und drittens, dem thema der systemischen risiken im finanzsystem. 1. economic and monetary developments the economic situation and outlook have continued to improve since my previous hearing before this committee ten weeks ago. the euro area economy shows increasing signs of recovery. economic activity in the third quarter is estimated to have increased by 0. 4 % compared with the previous quarter. in 2010 we expect to see a moderate recovery. this is in line with the latest eurosystem staff projections, which were published last thursday. however, this expectation remains surrounded by a high level of uncertainty. in the view of the governing council, the risks to the outlook remain broadly balanced. as regards price developments, inflation and inflationary pressures have remained low over recent months. in line with our expectations, inflation rates turned positive again in november, reaching an estimated 0