##b also explains the subdued demand in most countries for guarantees on shortterm debt with maturity less than one year. finally, certain factors might have discouraged the use of government guarantees, such as the associated “ stigma effect ” and the pricing, which may appear high in current market conditions. overall, the use of government guarantees on bank debt is considered satisfactory in most countries. at the same time, it is still too early to comprehensively assess the effectiveness of all bank support schemes in improving the longer - term funding of banks and in fostering bank lending to the private sector. the implementation of the bank support schemes has been gradual over the past few months and the evidence is relatively limited. but on one aspect, the facts already speak a clear language : namely that the use of guaranteed debt has been indispensable in providing banks with access to medium and longer - term financing : most – and in some countries even the totality – of the new bank debt issued since october last year has been government guaranteed. banks should take advantage of the available government support and strengthen their capital buffers, not least with a view to the prospect that the current extraordinary liquidity provision by the ecb will not remain in place indefinitely. this issue relates to the exit strategy to which i will return shortly. the governments ’ actions aimed at dealing with the crisis have not been limited to the support of the financial sector. fiscal stimulus packages across the euro area amount to €100 billion ( 1. 1 % of euro area gdp ) this year and a further €75 billion ( 0. 8 % ) is planned for next year. their financing as well the deterioration of budgetary balances due to the operation of the automatic stabilisers in the wake of the economic downturn, and the aforementioned bank support measures imply that the fiscal deficit for the euro area as a whole will surge, from 1. 9 % of gdp in 2008, to 5. 3 % in 2009 and further to 6. 5 % in 2010. 12 the dynamics of public debt are equally striking. compared to last year, the debt burden of euro area countries will grow by almost 9 % of gdp this year, from 69 % ( 2008 ) to almost 78 % ( 2009 ). these are worrying developments, especially when bearing in mind that this deterioration of public finances in the span of only one year wipes out the consolidation efforts of euro area governments of an entire decade. 13 by mentioning these figures i do not wish to deny that the current focus

future. let me turn to my second point, namely how macro - prudential regulation and supervision may affect the macroeconomic environment and hence monetary policy - making. it has been widely acknowledged that the regulatory framework has been contributing to the amplification of the natural fluctuations of the economic cycle. this phenomenon – known as pro - cyclicality – can for example be linked to the time - varying risk parameters for the calculation of capital requirements or the accounting framework. the need to address this excessive pro - cyclicality is a concern now shared by policy - makers globally. after their meeting in pittsburgh last month, the g20 leaders stated “ we want growth without cycles of boom and bust and markets that foster responsibility not recklessness. ” in other words, we need to preserve the efficiency gains arising from advances in financial development, but we also need to find ways to reduce threats to financial system safety and stability which seem to be inherent to the new developments and avoid, or at least limit, “ roller - coaster ” paths. moreover, there may be mechanisms through which macro - regulation may affect the provision of credit and ultimately output and inflation. for example, by requiring financial institutions to hold large capital and liquidity buffers or by limiting leverage, their cost of capital and lending may be impacted, which in turn may affect, at least in part, the provision of bank credit. these are only a couple of examples of how the regulatory framework may affect the provision of credit. there are many more rules and regulations that affect the supply of and demand for credit, thereby impacting broader macroeconomic outcomes. overall, the above examples clearly show that the regulatory framework can have important implications for macroeconomic outcomes and thereby can have direct consequences for monetary policy - making. at the same time, the regulatory framework may equally affect the transmission of monetary policy through its impact on the aggregate behaviour of the banking sector and, hence, also affect the effectiveness of monetary policy. looking forward, the question arises how the currently envisaged global reform agenda of the g20 will affect the macroeconomic environment. for example, will the general increase in capital and liquidity requirements or the introduction of a leverage ratio reduce the available resources for credit creation? how will the introduction of counter - cyclical capital buffers and more emphasis overall on risk management frameworks affect the behaviour of banks and the real economy? and more generally, are additional measures needed to make the regulatory framework more flexible and dynamic depending on the state of the economy? these