the future. full and consistent implementation of the stability and growth pact is key for confidence in our fiscal framework. we also acknowledge the findings of the imf fiscal monitor that good economic times prevailing before the crisis were not sufficiently used by advanced economies to build sufficient fiscal buffers. it is thus important that euro area countries now make sufficient progress towards their medium - term budgetary objectives. regarding structural reforms, important steps have been taken in several euro area member states, while in others measures still need to be implemented. product and labour market reforms addressing supply - side bottlenecks, as well as policies aimed at improving the business environment for firms, are crucial to the economic recovery. bold and effective implementation of reforms is not just in the interest of the individual countries, it is also key for strengthening the resilience and ensuring the smooth functioning of the economic and monetary union and for supporting growth at the global level. the implementation of the banking union has been a pivotal step in the reform of europe ’ s financial sector. the new environment for banks, reflected in the better health of the banking system, supports the transmission of our monetary policy and thereby creates more favourable conditions for the real economy, which could in turn support the private sector ’ s efforts to address debt overhangs and impaired corporate and bank balance sheets. the single supervisory mechanism ( ssm ) of the ecb has been in operation for just over six months now as the micro - prudential supervisor of all euro area banks and the direct supervisor of more than 120 significant institutions. the ssm is committed to establishing effective and high - quality supervision across its jurisdictions. while respectful of vital business diversity among ssm banks, an even - handed approach supported by harmonised supervisory standards will help to halt the fragmentation and underpin the reintegration of the euro area banking sector. the ecb is looking closely at the scope for rolling back national options and discretions in order to foster regulatory harmonisation. within the newly created banking union, the ssm has launched various initiatives to incentivise banks to reduce npes and to implement viable restructuring practices, as well as to achieve consistency in provisioning and realistic collateral valuation in line with accounting rules. the successful completion of the comprehensive assessment improved transparency in an unprecedented way and boosted the strengthening of banks ’ balance sheets. it thereby increased confidence in the european banking sector. remedial actions for shortfall banks have to be completed by end - july. supervisory priorities defined for 2015 aim to sc

relevance. yes, low interest rates are holding back banks ’ profitability, but our monetary policy is stimulating the volume and strengthening the quality of bank lending so well that its overall impact on banks is, for the time being, positive. if growth is to rise significantly and interest rates return progressively to levels more favourable to savings, economic policies must make a more active contribution. what does that mean in practice? budgetary margins for manoeuvre can be used, where they exist. but in most countries of the euro area they are limited or non - existent. in france, for example, where public debt is verging on 100 % of gdp, another delay in reducing deficits would mean taking an unconsidered risk with business and household confidence. in all of our countries, however, the mix of revenues and expenditure could be made friendlier to investment. and a comparison of current growth rates in the euro area shows a clear advantage for countries that have implemented the most ambitious structural reforms, most notably in their labour markets. 1 / 2 bis central bankers'speeches weak growth, high unemployment and low rates are not inevitable. they reflect the legacy of the crisis but are also a consequence of economic policies that are lacking in ambition. the ecb will continue to protect the euro area from financial shocks, but the monetary climate will not always be so favourable. and the global economy could present new risks. it ’ s time to draw – and act on – the appropriate conclusions. 2 / 2 bis central bankers'speeches