, in the absence of natural resources and a limited availability of the usual mechanisms for increasing competitiveness, enhancing the public infrastructure is considered crucial for economic growth in this region. in that sense, higher public savings to help funding increased public investment should be considered a necessary complement to a pegged exchange rate, which is also often the rule in this region. against this background, i am of the view that increased fiscal discipline is needed to reduce vulnerabilities or, to put it more positively, in setting conditions for stable economic growth in many countries in latin america and the caribbean. like other central banks in this region, the bank van de nederlandsche antillen plays an important role as advisor to the government, also in the field of fiscal policy. against this background, too, i hold the view that the bank ’ s main assets are not, as many may think, its foreign reserve holdings, but rather its human capital. my main wish for the future of the bank van de nederlandse antillen is, therefore, that it will be successful in maintaining its position as a centre of excellence in this part of the kingdom of the netherlands, to the benefit of the beauty of the islands of the netherlands antilles and of all its people.

the no - bail - out clause. under the latter provision, none of the participating countries can be held responsible for the debt of any other governments. this provision provides an additional incentive for governments to “ keep their own house in order ”. as to the monetary side of the eu policy framework, the ecb has announced a medium - term - oriented monetary policy strategy setting out how it goes about fulfilling its mandate under the treaty. in order, in particular, to enhance clarity, to anchor expectations and to offer a yardstick against which the ecb can be held accountable, a quantitative definition of price stability has been provided. longer - term inflation expectations indicate that the ecb ’ s definition of price stability over the medium term, an annual rate of inflation of less than 2 %, is perceived to be credible, both by market participants and the general public. furthermore, on the basis of its strategy, the ecb regularly explains its monetary policy decisions and its assessment of economic developments. with this high degree of transparency, the ecb provides the public and the fiscal authorities with extensive information on how to understand, and thus to anticipate, responses of monetary policy to economic developments, including those concerning fiscal variables. current experience with this policy framework in the eu is satisfactory. the maastricht treaty provides for a clear and consistent allocation of mandates and objectives to the policy - makers. it includes transparent frameworks and procedures. monetary and fiscal policy are offered steady guidance for action, while short - sighted behaviour is discouraged. fiscal policy developments in the euro area have been somewhat mixed recently. many euro area countries had undertaken major efforts to reach budget deficits of less than 3 % of gdp by 1997, which was a precondition for adopting the euro. later on, a majority of countries reached the required medium - term positions of budgets close to balance or in surplus. however, some euro area countries still face very high deficit levels that sometimes even exceed the reference value of 3 % of gdp. this reflects the fact that these countries did not use the strong economic upturn in 1999 and 2000 to bring their structural fiscal deficits down. as i have already outlined, budgetary discipline is indispensable for the proper functioning of economic and monetary union ( emu ). the rules are not the problem, but failing to comply with them is. debt sustainability one of the reasons, perhaps the most important one, for adopting a fiscal rule - based system such as the stability and growth pact is