Indeed, the experience with existing EU/IMF programmes shows that governments request official assistance only if it is strictly unavoidable through own efforts. In other words, there is no incentive for governments to wait and do nothing until they move into an ESM programme. By contrast, they have an incentive to put all their efforts into solving their problems without having to request a programme.
It is a major reference point for monetary policy, as it defines the “neutral” policy stance at any given time. Low equilibrium rates obviously affect the monetary policy stance, and any given policy rate is less stimulatory with lower equilibrium rates.3 If policy induces a short-term real interest rate that is higher than the natural rate, monetary policy is restrictive.