developed financial markets, and a more market - driven environment are key to the success of the liberalisation process. on the support for the low - income and poorer countries, the uneven progress made in meeting the millennium development goals is of deep concern. the debt relief proposal of the g - 8 to assist the heavily indebted poor countries ( hipc ) is a welcome step. debt cancellation, however, addresses the symptoms and not the cause of poverty. experience has shown only a few countries have graduated from the debt relief programme under the hipc initiative. many still continue to be burdened with unsustainable levels of debt. it is important to recognise that the task of assisting the lower - income countries does not stop short at providing financial assistance. development of education and health is an important part of the millennium development goals. the ifis also need to assume a greater role in encouraging the developed nations to invest and create job opportunities in the heavily - indebted poor countries and other poor nations as a long - term plan to assist lowincome countries to achieve the millennium development goals. finally, we share the view that the legitimacy, credibility and effectiveness of the fund and the bank hinges on the degree to which its representation reflects the relative significance of its respective membership. the 13 th general review of quotas represents an important opportunity to ensure that all members, especially the developing and emerging economies, have an adequate representation in the institutions that is consistent with their relative positions in the world economy. it is important for voices from this constituency of the emerging and developing world to not only be heard but to be listened to. we look forward to the commitment of the international community in preserving the fundamental, core principle of equality in the governance structure of the bretton woods institutions. this greater engagement within the international community will contribute to increasing the prospects for a greater shared global economic prosperity. 2 / 2

, which led to an unprecedented increase in government liabilities and ultimately in taxes, thereby hampering economic growth. i really cannot see why discretionary fiscal policies, which have been proven to be ineffective in the past, should work this time. at the current juncture, fiscal policies in the euro area would be well - advised to let automatic stabilisers operate freely but to otherwise maintain a medium - term orientation. let us not forget that the crisis originated from the shortening of horizons in financial markets. macroeconomic policies would be illadvised if they followed suit and likewise adopted a short - term horizon. this would mark the return to a mistaken past in which macroeconomic policies themselves were a source of instability and crises. finally, adjustments in financial market regulation in response to the crisis will bear fruit mainly over the medium term. exceptions are changes in accounting standards regarding the valuation of instruments in inactive markets, which are geared towards stabilising banks ’ balance sheets, thereby complementing the efforts of central banks and fiscal policies to revive financial intermediation. the financial crisis has exposed deficiencies in financial regulation. adapting financial regulation will be an important element of the second stage of the treatment : the prevention of future crises, to which i will now turn. 4. treatment ii : crisis prevention – getting incentives right or “ the need for a global financial stability pact ” when i talk about crisis prevention it should be clear from the outset that i do not believe that, regardless of the measures to be taken, the international community will be able to eradicate financial crises forever. what can be realistically achieved is to reduce the likelihood of financial crises and to dampen the amplitude of financial cycles. fifty years ago there was a consensus that discretionary monetary and fiscal policies geared towards finetuning the economy would mark the end of the business cycle. this belief resulted in what we now call the great inflation of the 1970s, a period of significant instability. the lesson we learned in europe was that fine - tuning policies are ineffective and produce very poor and undesirable results. when the decision was taken in the early 1990s to introduce a common currency in europe it was clear that this joint venture could succeed if, and only if, macroeconomic policies were permanently committed to price stability and sound public finances. this is reflected in the institutional set - up of emu with an independent central bank and the stability and growth pact. this marks a paradigm shift in economic policies in europe. the commitment to price