However, the effort has not yet been completed. Now that we have succeeded in overturning the twin deficits into twin surpluses – a primary fiscal surplus and an external surplus – we must focus our attention on structural reforms and speed up their pace.
The third element, related to the second, is for the central bank to conduct monetary policy in a systematic or rule-like manner.2 The fourth element, and arguably the most important, is for the central bank to set monetary policy independently from the fiscal authorities.