health system in israel is very good by any measure in international comparison. 8. another matter of concern, particularly when coming to approve the state budget, is that of examining a new approach to the budget process. this includes a multi - year approach to fixing budget aggregates, the involvement and responsibility of the different government ministries in the budget process, decentralizing budget responsibility through quality management of local governments, and increasing transparency of the budget process. most of these matters are in different stages of treatment by the government, and the bank of israel not only supports their progress but also assists as best it can. as i said earlier, this is only a very formative list, part of it already being dealt with and others only partly so, if at all. what is important is to start straight away on creating the necessary infrastructure that will propel the economy forward for many years. in other words, we must do everything possible to ensure this drive toward sustainable growth. this is vital not just for the future of the economy, but also for the future of the state of israel.

sensible approach to assessing the outlook for and the risks to price stability over all pertinent horizons, but especially over the more policy - relevant medium term, is to analyse and combine all available information in a conceptually appropriate and consistent manner. this conclusion is further supported by the nature and extent of the uncertainty faced by policy - makers : 1. uncertainty about the impact of ongoing processes, such as technological advances and financial innovations, on the economic structure ; 2. the associated uncertainty concerning the estimated values of key economic concepts, such as the economy ’ s potential growth rate, the neutral real rate of interest or the non - inflationary rate of unemployment ; 3. uncertainty about the way in which economic agents form expectations ; 4. uncertainty relating to the robustness and completeness of the estimated quantitative approximations of the theoretical paradigms that may be employed in policy analysis ; and 5. uncertainty about the accuracy of data, especially on a real - time basis. and needless to say, uncertainty was heightened – for the ecb – during the transition to the euro and the conduct of the single monetary policy. taking all of this into account, the choice of our policy strategy – employing both economic analysis and monetary analysis, and using the latter to crosscheck over the medium - and long - term the assessment resulting from the former – was the right one. it has served us well. my view on the assessment of the appropriateness and effectiveness of a monetary policy framework is summarised in the old saying that “ the proof of the pudding is in the eating. ” and i would contend that, over the past seven years, the pudding has been very satisfying. otmar issing, who played a central role in shaping this strategy, will elaborate on this tomorrow, and i should not say much more. i would, however, like to briefly make some points relating to the future. as shown in the paper presented earlier today by my ecb colleagues ( fischer, lenza, pill and reichlin ), the monetary analysis carried out at the ecb has evolved over time and is fairly comprehensive, going beyond the standard assessments based on the quantity theory of money and the stability of money demand. it employs a variety of tools in a manner that is not mechanical but combines judgement and analytical rigour in reaching a money - based assessment of the risks to price stability. the main conclusion from our experience with monetary analysis is that, on the whole, it helps us to extract useful information from monetary