An instrument is as liquid as the participants believe it to be. If more participants believe that an instrument is liquid and evince buying interest, it “becomes” liquid. While the product design, trading systems, regulatory dispensations, etc. do have an impact on the liquidity of an instrument, more importantly, it is the activity by the participants that makes the instrument liquid.
It includes: 1.  reforms to strengthen competition in goods and especially in services markets;  2.  reforms to increase flexibility and adaptability in labour markets;  3.  reforms to improve education (including on-the-job training and lifelong learning), boost research and development, enhance innovation and facilitate the diffusion of technological advances, so as to fully exploit the potential of an increasingly knowledge-based economy;  4  BIS Review 83/2007  4.  policies and institutions to create a more favourable business climate;  5.  reforms to foster integration, competition and innovation in European financial markets, with a special emphasis on venture capital: and  6.  reforms to enhance the quality and efficiency of public expenditure and of tax and benefit systems, and of the sustainability of public finances.