A solid fiscal framework can improve budgetary coordination over time by removing the built-in bias towards fiscal profligacy that is often attributed to democratically elected governments. A medium-term fiscal framework is particularly important, especially in the current situation, which requires credible plans to anchor expectations and, at the same time, a degree of flexibility in implementation so as not to hamper economic growth.
However, it does not follow from this that market forces necessarily have to work only ex post and continue to be “too slow and weak or too sudden and disruptive”. We must strengthen “gradual” market pressure. For that, I believe having pre-defined procedures for debt-restructuring and a well-designed crisis management framework would help greatly.