- bearer for liberal democracy is even more crucial. in my view, the best and most effective way to defend liberal democracy is simply by finding and enacting such policies that solve practical problems of our citizens – be they related to employment, environment, immigration, climate change, or other things. we certainly need bolder joint efforts to steer our societies towards a more sustainable future. many thanks for your attention. 1 “ der zustand des geldwesens eines volkes ist ein symptom aller seiner zustande. " 2 timo soini, populismi – politiikkaa ja poltinmerkki. yleisen valtio - opin pro gradu - tutkielma. helsingin yliopisto, valtiotieteellinen tiedekunta, huhtikuu 1988. the university of helsinki. 3 iversen – soskice, democracy and prosperity reinventing capitalism through a turbulent century, princeton university press 2019, p. 20. 5 / 6 bis central bankers'speeches 4 paul collier, ” the future of capitalism ” and raghu rajan “ the third pillar ”. 6 / 6 bis central bankers'speeches

decisions – even when the decisions go wrong. however, this does not mean that market discipline as such would operate in a smooth, always effective manner from the societal or economic point of view. as evidence, we can recall that market discipline did not work well in the years leading up to the crisis ( when the markets were disregarding the accumulation of risks ), nor did it work well when the crisis was at its most intense ( when the markets reacted in a disruptive way ). this experience is fully in accordance with the delors report of 1989. this report, which served as a blueprint for monetary union, noted that market forces can exert a disciplinary influence on the fiscal policies of the member states, but added : ‘ … market perceptions do not necessarily provide strong and compelling signals and ( that ) access to a large capital market may for some time even facilitate the financing of economic imbalances. rather than leading to a gradual adaptation of borrowing costs, market views about the creditworthiness of official borrowers tend to change abruptly and result in the closure of access to market financing. the constraints imposed by market forces might either be too slow and weak or too sudden and disruptive. ’ because of the often on / off nature of market behaviour, the euro area needs effective and credible ex ante rules for fiscal policy that will prevent countries from hitting the financing constraints on the markets. expenditure rules provide governments a less procyclical way to commit to sustainable public finances than deficit rules do ; by being less procyclical, they are also easier to stick to, and therefore more credible. a number of countries, such as the netherlands, sweden and finland, have used expenditure rules as the major building block of their medium term fiscal frameworks for a long time over the past decades, with relative success. the expenditure rule thus supports responsible fiscal policy, and increase national ownership of sustainable public finances. it could 6 / 9 bis central bankers'speeches well be applied across the eu. the need for further economic reforms it is not only our common currency area which is in need of reform. the biggest bulk of beneficial economic reforms are in the responsibility of national policy - makers. these reforms would be beneficial for the welfare of euro area citizens by promoting long - term income and employment growth, resilience of the economies to adverse shocks, and social fairness and inclusiveness. by facilitating adjustments to regional shocks they would ensure the smooth functioning of the euro area and the efficient transmission of monetary policy