entered the financial crisis and the economic downturn with unnecessarily weak fiscal balances, having missed the opportunity presented by past years ’ revenue windfalls to consolidate their budgets. while this is never a popular message even in normal times, it still deserves mention so that the mistakes can be avoided once the crisis has passed. indeed one of the fiscal policy errors prior to and including 2000 - 01 was to mistakenly interpret budgetary improvements in good times as evidence of structural improvements, which were often used to motivate spending increases or tax cuts. on a positive note, we can say that while compliance with the stability and growth pact during its first ten years has been somewhat uneven, the eu ’ s overall fiscal performance in terms of avoiding high budget deficits and the build - up of government debt was much better than in the decades preceding the pact. 1 indeed, some of the eu countries that comply with the stability and growth pact can now take advantage of their relatively large automatic stabilisers to do much of the work. these accomplishments should be a guiding beacon. sound fiscal policies with a strong keel provide the basis for stability and the necessary conditions for good long - term growth in the challenging seas ahead. one additional dimension of policy coordination in the euro area is that between the single monetary policy and the national fiscal policies of the member states. in this respect, the institutional set - up of european monetary union consists of a clear and efficient assignment of objectives and instruments to the different authorities, together with a strict division of responsibilities. the ecb must focus on its primary mandate of delivering medium - term price stability under conditions of full independence. fiscal policy must focus on its traditional objectives related to allocation, redistribution and stabilisation ( to varying extents ), while contributing to maintaining an environment of macroeconomic stability. of course, in setting monetary policy the ecb takes into account the fiscal policy stance, as one of the factors which contribute to the outlook for price stability over the medium term. it goes without saying that an open exchange of views and information among the different authorities is welcome if it enhances a common understanding of desirable objectives and strategies to pursue them. however, there cannot be any scope for active ex - ante coordination of fiscal and monetary policies. indeed, a commitment to ex ante coordination between fiscal and monetary policies may blur the responsibilities of the various authorities at the expense of accountability and may ultimately reduce their incentives to pursue their objectives. thus, the current macroeconomic policy framework in

with it for a good number of years, including presiding over some of its major proceedings. i can, therefore, attest to its evolution ; and here follows a snapshot of it. the world economic forum was established in 1971 in switzerland. it initially focused on the needs of european business leaders, but it now has a truly global outreach, encompassing both the private and public sectors in more than 140 countries. the forum has encouraged pursuit of appropriate economic, fiscal, trade and social policies by bringing together major corporate and political leaders, ngos, multilateral financial institutions and social observers. the forum ’ s annual meeting, that takes place in davos ( switzerland ) is, of course, the most well - known and well attended gathering ; the regional meetings also have increasingly high profiles. furthermore, the forum facilitates policy discussions through a wide - ranging research programme that includes reports and surveys covering a variety of topical issues such as economic growth, environment, finance, technology, health and social development. among these, the global competitiveness report is the best known, having been first published in 1979, at which time there was a coverage of only 16 countries. this has successfully given birth to a growing family of related reports that focus on specific regions, sectors and issues. bis central bankers ’ speeches the objective of these reports is to provide a benchmarking tool for policy - makers and business leaders, and the principal means of doing this is through rankings of participating countries according to a range of relevant criteria, which are aggregated into an overall index. in this case, the global competitive index ( gci ) looks at a wide range of factors that contribute to performance of key pillars. the pillars are institutional effectiveness, infrastructure, macroeconomic environment, health and education, markets for goods, services and labour, financial development, technology, as well as innovation. information from the executive opinion survey is supplemented with a range of measurable factors. similar methodologies are employed in other rankings such as the world bank ’ s ease of doing business and in transparency international ’ s reports on corruption. there are also similarities with the human development index of the united nations development programme ( undp ). i hasten to stress that these various products, which often overlap in their coverage, should be seen as complementing, rather than competing with, each other. indeed, in calculating its rankings, the world economic forum makes significant use of data collected by the world bank. i now turn to the overall results of this year ’ s report