I focus here only on a few selected issues where I feel that significant breakthroughs would make a major contribution to preparing the economy for the exigencies of monetary union. In particular, more stress needs to be placed on enhancing competition in product markets and improving labour market flexibility.
Some in the pipeline are 1) defining the benchmark yield curve so that pricing is transparent and independent of one large market participant’s rejections (I meant actions) in the auction market, 2) awakening the moribund repo markets so that liquidity is improved and one-sided quotes will be a thing of the past, 3) standardizing OTC derivatives so that structured products would have more legs to stand on, and 4) obtaining the components of shadow banking so that the unregulated activities are brought to the surface.