Further efforts are needed, however, to increase individual firms’ room for manoeuvre within the framework set by negotiated wages, and to lower the costs of additional employment by reducing non-wage labour costs. Health care and corporate tax reform also have to be addressed in the near future.
But when our priorities shifted towards the need to re-engage banks in active credit intermediation, those elements lost traction. The non-discretionary, passive generation of liquidity which is characteristic of systemic LOLR operations had to be replaced by a more active strategy of control over the size and composition of our balance sheet.