More progress is also needed with fiscal structural reform as part of a comprehensive medium-term strategy to improve economic incentives and the soundness of social security systems. This would be a crucial contribution of fiscal policies to economic growth and fiscal sustainability as well as to confidence in the revised Stability and Growth Pact.
As with the other Principles, this one is also of general relevance. All firms, and not just banks, need to avoid a situation in which their compensation practices reward employees for taking excessive short-term risks. This is not to say that bonus systems are undesirable.