It is also necessary to take into account the relevance of employment and productivity developments when determining the sustainability of the pension system and, therefore, of the general government balance sheet. This is why it is so important that pension system reform should take place at the same time as structural reforms are adopted to improve the economy’s employment and productivity performance. It is also necessary to be aware that these variables themselves depend on the characteristics of the pension system, which should be geared towards fostering labour participation and worker productivity. We need to remember, moreover, that demographic developments, the ultimate reason for reforming the pension system, will also have effects in many other areas of economic activity over the coming decades, such as long-term growth, the configuration of the labour market, inflation, demand policy transmission and tax revenues.13 That is one more reason why it is necessary for pension system reform to be accompanied by structural reforms in other areas. The pension system reform should be intended to be long-lasting, since it will affect the economic decisions of all the citizens of many generations in relation to consumption, investment, labour supply and savings. Accordingly, it would be highly desirable for the reform to enjoy a broad consensus and to produce stable and transparent rules. 3.5  Next Generation EU  As I indicated earlier, one recent highly significant development was the approval by the European Council in July of the European recovery programmes.
Yves Mersch: Law, money and market – the legal dimension of monetary policy Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Information Club Meeting, Luxembourg, 31 May 2014. *  *  *  Ladies and gentlemen, Thank you very much for inviting me to speak at this event. What I would like to address in my remarks is what went wrong with the governance of the euro area and how to fix it. But as this has been much discussed in the past, I want to come at the question today from a slightly different perspective: that is, to go back to the first principles of what makes a market economy function, and then to look at the situation in the euro area from there. 1. Law, money and the market  A well-functioning free market is a socio-economic construct. It is created by a consistent accord of rules, instruments and institutions. As economies develop, what this accord entails changes. But at the most fundamental level there must be a harmony of law, money and freedom. This is because the rule of law guarantees the freedom of the individual by defining the scope and boundaries of his or her action. And in turn, it is the freedom of the individual that creates the agency and choice which is essential to produce a free market to the benefit of the whole society.