are contained. if our assumptions and baseline scenario continue to be confirmed, a progressive withdrawal of monetary accommodation remains warranted. acting in a timely manner will make an ongoing contribution to sustainable economic growth and job creation. as regards fiscal policy, in several member states public finances appear to be on track to meet or even exceed this year ’ s targets as the favourable economic situation, revenue windfalls and effective consolidation measures exert a positive influence on fiscal balances. however, in other countries, the current fiscal outlook suggests a shortfall in terms of the required structural improvement in public finances. this is worrying in view of the objectives and commitments agreed under the revised stability and growth pact. it is therefore essential that 2006 budgets are executed strictly during the remainder of this year, and that budget plans for 2007 and beyond are sufficiently ambitious. all countries should take advantage of the current economic recovery to consolidate fiscal balances. especially countries in excessive deficit procedure and with a high debt - to - gdp ratio should use the current economic recovery to bring the public deficit ratio to below 3 % within the agreed deadline, and more ambitious fiscal consolidation is essential to achieve the medium - term objectives. it is also crucial that comprehensive reform programmes strengthen economic incentives and enhance the sustainability of social security systems. this is the best contribution that fiscal policies can make towards building confidence in the outlook for growth and stability in the euro area and in the revised stability and growth pact. as regards structural reforms, the governing council stresses the need to raise the potential growth rate of the euro area, to foster incentives to work and to strengthen the euro area ’ s capacity to absorb shocks. comprehensive reform measures to ensure a fully operational internal market, a higher degree of wage and price flexibility, and a more favourable business environment would offer new opportunities for firms and workers and promote investment, innovation and job creation. such structural reforms would not only help to underpin the momentum of the ongoing economic recovery, but would also safeguard the standard of living of euro area citizens in the longer run.

banks or banking structures or “ national champions ” were in the interest of the respective taxpayers. the elimination of potential national bias is therefore key. implementation of the european dimension depends on several elements. the first is the appropriate scoping of participating jurisdictions. the establishment of the ssm will bring all banks established in the euro area, and the credit institutions established in those member states which have entered into a close cooperation with the ecb, under the supervision of the ecb. this creates a level playing field. whereas only the most significant banks will fall under the direct supervision of the ecb, less significant banks, while remaining under national supervision, will not be excluded from the ecb ’ s supervisory reach. 1. national authorities will have to abide by ecb regulations, guidelines and general instructions and be subject to the ecb ’ s broad oversight mandate over the functioning of the ssm. 2. to ensure the consistent application of supervisory standards, the ecb may decide at any time to exercise direct supervision on less significant credit institutions. 3. the possibility for non - euro area member states to join the ssm emphasises the eu - wide dimension. this also implies that they will have to adhere to the guidelines and instructions issued by the ecb. the design envisaged for the ssm is based on building a strong centre, supported by an adequate allocation of tasks between centre and periphery. the responsibility and decision - making power for the overall functioning of the system will be held by the ecb. its efficient operationalisation, however, will depend on the national competent authorities, whose expertise and proximity to the supervised entities are essential in ensuring that no aspect is overlooked. even in the case of banks directly supervised by the ecb, experts from national authorities will be involved in on - site inspections. these and bis central bankers ’ speeches other operations should be conducted in the context of joint supervisory teams headed by ecb experts. the conferral of supervisory tasks to the central bank mirrors the prevailing consensus in many jurisdictions. the crisis has actually reinforced this trend of central banks acquiring supervisory responsibilities, benefiting from the synergies between monetary policy and supervision. these first include potential benefits from the sharing of information with regard to monetary policy, the supervision of banks and the oversight of payment systems. second, central banks can draw on expertise in the field of financial stability analysis. third, the institutional independence of central banks, with clearly defined rules of accountability, can positively contribute to the effective conduct of