poland ) an agreement on strengthening the economic governance procedures of the euro area. the european parliament votes on the governance package – the so called six pack – this week and i expect it to be in force as of beginning of 2012. the political process in europe is sometimes painfully slow. it is also very complicated and can be confusing to an outside observer. this is because of the very nature of our union. eu is an entity with a lot of jointly legislated and mutually binding norms. but a common executive is really operative in certain limited areas only, such as trade, competition and agricultural policies – and in monetary policy, in the form of the ecb. in most areas, however, eu does not operate by a common executive agency ; it operates by common rules. in these areas, the competence of the eu executive – the commission – works through the regulation and surveillance of the national governments ’ actions. the structure of several national executives, operating under union treaties and directives, and the complicated process of making these norms, explains why eu works differently from the u. s., which has a unitary executive at the federal level, vested in the president. the way the eu is operates often stretches the patience of the financial markets, who would like to see quick and clear - cut decisions instead of slow negotiations by large committees and councils. a rule - based system of coordination works best if the rules are good, if they are followed and enforced, and if the world is stable. under conditions of large and surprising shocks, like the recent great recession, and soft enforcement of the common rules, the eu ’ s economic governance has not worked effectively enough, and this is a major underlying reason for the present problems. * * i return now to the three fronts on which advance is necessary to restore stability. the first of the fronts, fiscal correction, means that countries having a fragile fiscal position now must correct it, as they have indeed committed to do. these countries fall into three categories. the first is greece, which is actually deemed a special case now. the new eu / imf adjustment program for greece is crucial to foster sustainable economic growth and stabilize public finances. strict and rigorous implementation of this program is absolutely necessary. besides fiscal consolidation, the privatization measures and structural reforms agreed in the program are essential for revitalizing the greek economy and to create growth over time. bis central bankers ’ speeches in the summit of july 21, 2011, the heads of state and government made a number of

##ted the service sector and domestic demand, and we are not predicting recession. having said that, europe faces its own structural problems, such as population ageing and declining productivity growth, as well as the long - term challenge of mitigation of and adjustment to climate change. and we have to add the uk debate on its relation with the eu, which resembles a shakespearean drama – not his best work, though, as it has become rather repetitive – of “ to brexit or not to brexit, and if so, how ”. the brexit deadline has yet again been postponed, and the uk is now going to hold parliamentary elections in december. the recent estimates by the bank of england suggest that successful preparations have softened the impacts of a worst - case scenario. however, a disorderly brexit would still impose severe economic damage on the uk. for the eu27, the impacts vary widely between the countries with the order of magnitude being about 10 – 30 per cent of the negative impact experienced in the uk. 1 / 3 bis central bankers'speeches maintaining an accommodative monetary policy stance inflation in the euro area has stubbornly continued to fall short of the ecb ’ s target, and inflation is projected to remain subdued. in response, the governing council of the ecb substantially increased monetary accommodation at its meeting in september. with this decision, financing conditions will remain accommodative for an extended time period and contribute positively to the euro area ’ s growth outlook. the past decisions to restart the easing phase in march this year and to resume the net asset purchases in september were taken in response to the continued shortfall of inflation with respect to our target. this does not mean that we would close our eyes to possible negative side effects of unconventional monetary policy. however, as long as the synchronised global slowdown continues, there is no economically meaningful alternative to an accommodative monetary policy stance – and it is better to be safe than sorry. in this context, monetary policy needs to make inflation expectations converge with the price stability objective. it is our ambition that as a result of our actions, we will see a rebalancing of the euro area economy and the normalisation of interest rates. nevertheless, low interest rates, low inflation, and persistently low growth have put our economic theories and past empirical relationships to a real litmus test. discussions concerning a review of the ecb ’ s monetary policy strategy have