ongoing vigilance in order to maintain inflation expectations in line with price stability. in fact, by keeping medium - term inflation expectations firmly anchored at levels consistent with price stability, monetary policy is making a significant contribution towards a recovery in economic growth. prudent fiscal policies could provide considerable support for confidence in the euro area. the discussions on revising the stability and growth pact regulations have been concluded and rigorous implementation is now key to ensuring an effective framework for fiscal policy coordination and discipline. this is all the more true as current and projected fiscal deficits in several euro area countries still need to be addressed with rigour. in a number of cases these deficits not only imply a rising debt ratio, but also leave no safety margin for short - term budgetary relief in the event of adverse developments. in this context, as significant revisions of past deficit and debt figures have been reported for a few countries, let me also reiterate previous calls by the governing council for the reliable compilation and timely reporting of government finance statistics. finally, let me conclude with a few words on structural reform. as we have stressed repeatedly, a decisive and comprehensive set of measures aimed at achieving a more dynamic and competitive european economy with flexible labour and product markets is urgently needed. the primary objective of such measures is to deal with the ongoing challenges from globalisation, rapid technological change and ageing populations and, overall, to ensure greater resilience to shocks. these challenges are not specific to the euro area. successful structural reforms would, however, also contribute to fostering the adjustment processes within the euro area. in particular, they would allow those member countries with a weaker record in terms of economic growth and employment creation to perform better in the future. as regards existing growth and inflation differentials within the euro area, there is clear evidence that the dispersion of inflation and real gdp growth rates in the euro area is not materially different from that of the united states and it does not show any signs of having increased since 1999. however, in cases where differences are not due to catching - up processes or temporary factors, structural reforms are even more necessary to enhance economic performance and flexibility in the adjustment process.

of sovereignty with regard to economic policy. the political cost related to this loss of sovereignty constitutes a forceful deterrent. indeed, the experience with existing eu / imf programmes shows that governments request official assistance only if it is strictly unavoidable through own efforts. in other words, there is no incentive for governments to wait and do nothing until they move into an esm programme. by contrast, they have an incentive to put all their efforts into solving their problems without having to request a programme. besides, purchases under omts are limited to shorter dated bonds, namely, up to the three year tenor. government yields at longer maturities would be entirely determined by market forces, and at shorter maturities, fear of the programme running off - track and omt eligibility being lost would be reflected in market prices. overall, these considerations demonstrate that omts do not eliminate the market as a disciplining device for governments. what omts do is to complement the market, which in the current crisis has been abrupt and unreliable, by another incentive mechanism. risks to the ecb balance sheet let me turn to the second argument, which is related to the ecb ’ s risk exposure. thus far, we are in the comfortable situation that desirable effects of omts have materialised without a single euro being spent. in fact, risks to the balance sheet of the ecb have vastly decreased since mid - 2012, thanks to the convergence in yields and marked decrease in central bank borrowing. but indeed : once we were to conduct bond purchases under omts, the eurosystem would assume the concomitant balance sheet risk. under an extreme scenario with the default of the sovereign concerned, the resulting losses would have to be shared across the eurosystem. ultimately, this could indeed constitute a transfer of risk among euro area countries. let me make three remarks on this : first, it is precisely the existence of omt that contains the risk of such catastrophic scenario to materialise, since : • by its very existence omt eliminates the undue spread components and hence selffulfilling default trajectories. • through conditionality omt fosters incentives for sound economic and fiscal policies. • and by focusing on bonds with shorter residual maturity, it limits the duration of the risk exposure to a given creditor. second, any risk comes with a reward. under a successful omt programme, interest payments on the bonds purchased by the ecb amount to a transfer from the benefiting