Sound public finances in conjunction with structural reforms are a key precondition for growth. The reason is that people’s concerns about an increasing debt burden and ensuing adjustment needs in the future will affect their spending and investment today. Thus, it is important that governments adhere to the consolidation plans they announced.
Another option we have is overnight (O/N) risk-free reference rate (RFR) Compounding (Fixing in Arrears) (hereafter "compounding in arrears"), which uses the uncollateralized overnight call rate in Japan.2 I will go into a little more in detail, because the term may not sound familiar to everyone.