adjustment expected from us. it is hardly surprising that weariness with this struggle creates an intense demand for, let us say, novel economic policy proposals which promise to painlessly set the economy on a growth path. however, ideas that do not pass the test of economic rationality are of no help. indeed, they may actually make things worse by adding to the confusion. i am convinced that the only way to overcome the crisis is to do our utmost to reduce uncertainty, at least in the areas under our control and to create a predictable institutional environment. in the words of james madison, 4th president of the united states : “ it will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood ; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to - day, can guess what it will be to - morrow. ” what are the potential building blocks of confidence and predictability? fiscal consolidation must be made credible, and public debt must be set on a sustainably declining path. at the same time, the predictability of the legal and regulatory environment must be ensured. the operation of the financial intermediation system, which ensures the smooth operation of the economy, must be restored. price stability must be achieved. there is no chronological or preference order in the implementation of these three tasks. if we are to create a predictable economic environment, they need to be performed simultaneously and in combination with each other, rather than at one another ’ s expense. first task : stabilisation of the fiscal outlook the crisis put an end to the excessive fiscal spending that characterised hungarian economic policy in the first half of the 2000s. the narrowing of cheap funding opportunities necessitated the stabilisation of long - term fiscal prospects. bis central bankers ’ speeches as a result of the adjustment measures adopted since 2006, the deficit has been reduced substantially, and several sub - systems of general government have undergone major structural changes. the systems for education, health care, welfare benefits and local governments have all been changed. these changes have led to an improvement in the balance in the short term, but their effects on fiscal sustainability will only be manifested in the longer term. since the onset of the crisis, fiscal tightening has faced strong headwinds. the fiscal room for

the hungarian intraday clearing project. is there a happy end? yes, there is. together with banks and giro, we are working hard to make the project to come through. seen retrospectively, there are a number of banks who are now already happy about the actual start of the project and thus they share with us the same vision towards a more integrated and efficient retail payments market. a mixture of talks, technological innovation, standardisation, self - regulation and legally binding regulation has been used, and in addition to this mixture we closely monitor the implementation of project and in due time, i. e. after the go - live date : 1 july 2012 we will control the compliance with the regulation. efficiency going to the second topic of efficiency let me start with a very popular research topic of the past years. in the last couple of years it is in fashion that central bankers publish so called cost of payments studies. one may raise the question whether it is a good or bad fashion. i definitely belong to that group of supporters, who perceive cost of payments surveys as a very important form of communication to policy - makers and strong underpinning why public welfare can warrant public policy intervention in these markets. in a free market economy, one has to prove – and not just say – that on the one hand the social costs of cash are higher than that of electronic payment instruments and on the other hand, the market alone – due to the strong externalities that exist in this field – cannot achieve social optimum. the hungarian central bank has therefore joined the pan - european survey on social costs of retail payment instruments. we have prepared our own analysis on the costs of hungarian retail payment instruments. we have done it, because the use of cash is excessive in hungary in comparison with other european countries. the value of cash in circulation corresponds to about 8 % of gdp in hungary, and partly we face the implications of the hidden economy. we need systematically collected and processed information on the use of various retail payment instruments and the related costs along the payment chain, to underpin our policy decisions. we wanted to be convinced of the lower social costs of electronic payments in relation to that of paper - or cash based ones. at the same time we have overhauled the payment habits of the hungarian public sector, and indentified the most in - effective areas in their payment habits. our key motivation was that payments by and from public sector account for about 30 % of retail payments in hungary. we have taken a snaps