European Central Bank President: to cut the deficit out of the crisis.

<P> Present, all the industrialized economies are facing serious financial challenges, it is not surprising. .Our economy just emerging from the most severe since World War II, economic crisis, if central banks do not quickly take appropriate measures, fiscal policy does not make a significant contribution, we will be plunged into a severe recession. .But now it is time to restore fiscal sustainability. .Its size and geographic scope, we are now experiencing is unprecedented fiscal deterioration. .End of this year, with only 4 years from the period 2007-2011 compared to the euro zone government debt will grow more than 20%. .In the United States and Japan, the figure of 35% to 45%. .</ P> <P> three phenomena contributed to the growth of public debt: recession led to sharp drop in tax revenues; increase in expenditure (including the fight against recession, the starting stimulus); and the collapse of the financial sector to avoid the extra step. .Since we avoid the catastrophic scenario of a financial collapse, for most countries, the third factor does not mean that a large amount of expenditures. .However, according to the European Central Bank (ECB) estimated that the financial sector to support the scale of the taxpayer risks - including capital restructuring, guarantees and all the options of toxic assets - gross domestic product (GDP) share of 27%. .It should be noted that this proportion across the Atlantic is also very high. .</ P> <P> the above facts, to solve our financial vulnerability, has become a consistent global policy-makers target. .The good news is, it is generally considered necessary to implement sound financial exit strategy, and far-reaching financial sector reforms. .However, differences still exist on the implementation of the timing. .In arguing for suspension of operation of the camp, some people argue that to maintain or even increase the fiscal stimulus, in order to avoid endangering the economic recovery is a desirable approach. .Others claim that fiscal consolidation will inhibit the growth environment, and thus on the global economy, negative systemic effects. .I do not agree with these views. .We must avoid the policy asymmetry, one side is reasonable but despite the liberal policy of bold, one side is too indecisive policy of austerity. .Industrialized countries must begin now to implement well-designed fiscal consolidation strategy (specifically, the consolidation of the current recovery) of the following three main reasons: </ P> <P> first time we have in common the experience of fiscal consolidation, .This shows that the reduction of fiscal imbalances caused by large long-term benefits. .These experiences also show that if the fiscal consolidation as part of a comprehensive reform strategy to be implemented, short-term costs of economic growth tend to be controlled, or are very limited. .The success of fiscal consolidation strategy, depends largely on its design. .On the expenditure side adjustments, accompanied by structural reforms to promote long-term growth is usually the best strategy - especially in a reliable and committed to the long-term commitment to fiscal consolidation combined case. .</ P> <P> Secondly, given the size of the annual budget deficit and ballooning public debt outstanding, to the prediction of financial constraints or fiscal stimulus effects of standard linear economic model may no longer be reliable. .In the special period, the economy may be close to non-linear phenomena, such as a large number of families, businesses, savers and investors the confidence to deteriorate rapidly. .My understanding is that most industrialized countries are in such a situation of uncertainty, confidence may be at risk. .In this situation, fiscal consolidation is imperative. .</ P> <P> Third, the systemic economic stability - and the resulting sustainable growth - depends on the public finances in a difficult environment, the limits of capacity to intervene. .When our economy is in a typical business cycle, financial cushion is essential. .And when our economy is faced with special circumstances, this buffer is even more necessary. .When the use of taxpayers accounted for GDP27% risk, if our public finances are not reliable, we can not avoid financial crisis and the Second Great Depression (GreatDepression). .We are making every effort to avoid future financial sector caused by the complete failure of an economic disaster. .I believe we will succeed. .But even if the Group of 20 (G20) the best implementation of financial reform, there are many different factors will lead to economic and financial turmoil. .Other, including natural disasters accidents that may require emergency financial support. .Sound public finances, economic stability and sustained growth in the world a decisive factor. .</ P> <P> hindsight, we can see, the fiscal stimulus measures to "stimulate", "activate", "consumption" as the motto, to the industrialized economies, is too simplistic to convey a message, which is .very unfortunate thing. .Most of the more fortunate countries, have an operating room; other countries, a small space; and some countries do not have a little space, the fiscal consolidation should begin. .For each economy, should always be tailored to a specific strategy. .But now, all countries must implement a reliable medium-term fiscal consolidation plan, no doubt. .</ P> <P> we have experienced since 2007, the special circumstances, the Atlantic, English Channel, and even across the Pacific to central banks around the world, have showed that they own extraordinary ability to analyze unprecedented situation, and make .correct decision. .They also face the risk of inflation and deflation are two cases, the design of their own monetary policy stance to maintain price stability and credibility. .They carried out to improve the function of financial markets, sector-specific non-standard transitional measures, which for the transmission of monetary policy is extremely important. .They also carried out an unprecedented international cooperation. .In the August 9, 2007 the beginning of the financial crisis the European Central Bank to act, will ensure price stability in the euro area, in order to consolidate a self-confidence to contribute to the economic environment - as in the past ten years to do. .We hope that governments confirm their determination to consolidate its public finances. .In the moment, this commitment for the G20 "strong, sustainable and balanced" growth paradigm for ever, and they are made in order to avoid depression and abnormal bold decisions are equally important. .</ P>.