on these countries. conversely, lending to households and corporations becomes more attractive, spelling an improved credit supply in certain countries. as it could become more expensive for countries to borrow funds, there is considerable resistance at international level to abolishing this preferential treatment. however, the topic is bis central bankers ’ speeches now on the agenda of the relevant committees, and my colleagues and i will not let up in the fight for change. 4. conclusion ladies and gentlemen i do not wish to take up too much of your time, so i shall refrain from going into further detail. my aim is merely to demonstrate that centralisation is not the only route to a stable monetary union. the union can also be stabilised with a decentralised structure, as long as the conditions are right. and until member states are prepared to surrender sovereignty in return for improved risk sharing, this is also the better route. incidentally, strengthening the maastricht framework would also relieve the strain on eurosystem central banks, which all too often had to take on the role of “ sweeper ” during the crisis. in the world of football, the position of sweeper has been outdated since back in the days of franz beckenbauer, and the emergence of the defensive back four has made it quite a rarity indeed. let us do the same, then, for monetary union ; let us replace the sweeper with a strong line of defence : a strengthened maastricht framework. thank you for your attention. bis central bankers ’ speeches

even increase slightly around the turn of the year. despite the recent decline in oil prices, changes in administered prices and some adverse base effects on the most volatile components could have some upward impact and delay the return to inflation rates below 2 %. however, these developments should be temporary. looking further ahead to the prospects for inflation, let me start by reviewing the liquidity situation, as evidenced in monetary developments, which is an important part of our analysis of risks to price stability over the medium term. at present, there is more liquidity in the euro area than would be needed to finance sustainable, non - inflationary growth. this is due in part to the low level of interest rates in the euro area, which is fuelling the demand for liquid assets. however, the continued strength of monetary growth is also due, to a large extent, to portfolio shifts into m3. these shifts occur for precautionary reasons in an environment of high financial market uncertainty. in view of this, and given the current environment of subdued economic activity, we do not see a high risk of this translating into inflationary pressure in the near future. the continuing strengthening of the euro since early this year together with the weak pace of economic growth in the euro area are in fact dampening inflationary pressure. however, for annual inflation rates to fall below 2 % in the course of 2003 and for them to remain in line with our definition of price stability thereafter, it is crucial that oil prices do not significantly increase again and that the upward movement in labour cost indicators in the euro area, which has been taking place over recent years, does not continue. these indicators have shown a notable inertia despite the subdued economic expansion. at the last meeting of the governing council of the ecb on 7 november, in view of the high uncertainty on future economic growth and its implications for medium - term inflationary developments, we discussed extensively the arguments for and against a cut in the key ecb interest rates. the overall view was to keep interest rates unchanged. in the same statement, however, we also said that we will monitor closely the downside risks to economic growth in the euro area, in view of their potential dampening effect on inflationary pressures. let me now briefly turn to fiscal policies, an issue that is currently receiving particular attention in europe. let me remind you that that the principle of budgetary discipline enshrined in the treaty and the stability and growth pact establishes that member states should maintain over the