Wage discussions need to recognise the increased purchasing power of money in an environment where inflation is falling; if not then our wage structures will move out of line with competitors. Retaining wage competitiveness to sustain and increase employment is a key priority, even if it means cuts in nominal wages.
Take the regulatory treatment of government bonds as an example. Unlike for all other forms of credit, banks do not have to hold capital against government bonds in line with the risks that they carry, and this inconsistency has dangerous side-effects. Since the euro-area sovereign debt crisis – if not before – it has become clear that government bonds are anything but risk-free.