strengthen the capacity of eu institutions to take collective decisions. this would require three components : first, reducing the degree of inter - governmentalism in decision - making and thus diluting the unanimity principle ; second, strengthening the rules that constrain national decision - making ; and third, establishing a more effective enforcer of those rules. i have already mentioned the weaknesses of the decision - making process when addressing crises. there are counter - arguments to my view, which have been put forward by distinguished commentators and policy - makers. however, experience – the exchange rate mechanism and the debt crisis are two examples – has shown that under such a mechanism decisions are systematically taken too late and that the burden on taxpayers ultimately increases. all those who attach importance to the interests of taxpayers should reflect on this. let me be clear. i am not calling for a fiscal union or fiscal transfers to be decided through a majority system. i am just warning that unless decisions concerning the implementation of a financial safety net are taken more efficiently, i. e. through a communitarian approach based on majority decisions, as is the case at global ( imf ) level, the risk of implicit transfers will actually increase, which may not be in the interest of most taxpayers. experience of over 50 years has shown that imf shareholders, i. e. taxpayers, have never lost money under such a system. why innovate? there are many other areas where european creativity can be better put at work! the second component – strengthening the rules – is already under way at eu level via the economic governance reform package. while we still have some misgivings about the current proposals – which in our view do not go far enough – progress is being made. in particular, the sgp should have been further streamlined to avoid drawn - out procedures and reducing the margins for discretion through the greater use of reverse majority voting. the european parliament has in any event pushed hard in this area, but at the current juncture it remains to be seen how successful its efforts will eventually be. much can be done also at national level, without having to change the treaty or eu secondary law. for instance, the introduction of debt ceilings into national legislation that are consistent with stability programmes approved by the council would arrest excessive debt growth even before eu procedures were initiated. rather like “ neighbourhood watch ” programmes in local communities, this would also spread policing responsibilities and involve national parliaments and fiscal institutions in enforcing the rules. debt ceilings, however, contain

##b working paper no. 273. ( b ) long - term inflation expectations from the survey of professional forecasters refer to 5 years ahead for the euro area and 10 years ahead for the us. last observation is july 2005 for the euro area and august 2005 for the us. chart a long - term implied forward break even inflation rates in the euro area and the united states source : reuters and ecb calculations. euro area beirs are derived from italian government inflation indexed bonds maturing in 2008 and 2014.