However, structural impediments continue to exist in the euro area; they help explain still high levels of unemployment and low participation rates. Further reforms can only foster economic growth and create additional employment opportunities. Fiscal developments in the euro area have also been favorable in recent years. However, budgetary improvement has largely been the result of strong output growth and revenue windfalls.
The New York Fed and other supervisors are working with market participants to fundamentally change how CDS and other OTC derivatives are processed by applying increasingly stringent targets and performance standards. They are also emphasizing that dealers must demonstrate their capability to adequately manage the failure of a major counterparty, including calculating exposures rapidly, having clear management procedures, and conducting internal stress exercises.