23.04.2021
The euro area outlook, monetary policy at the current juncture, and
lessons for the ECB strategy review
Ernst and Young Insights Forum
Pablo Hernández de Cos
Governor
Good afternoon, ladies and gentlemen.
I would like to thank EY and its President, Federico Linares, for their kind invitation to the
EY Insights Forum. It is a pleasure for me to participate in this initiative that brings together
research institutes, think-tanks and policymakers to reflect on economic issues.
In today's talk, I will first comment on the euro area growth and inflation outlook at the
current juncture. I will then discuss what this outlook may imply for monetary policy in the
euro area, including how our pledge at the ECB Governing Council to preserve favourable
financing conditions may be interpreted in the light of this outlook. Finally, I will take a longer
view and discuss what lessons from recent economic and monetary policy developments
in other advanced economies could be extracted for our ongoing monetary policy strategy
review at the ECB.
The current outlook for activity and prices in the euro area
The global economy has been recovering since the sharp contraction due to the onset of
the COVID-19 pandemic in the first half of 2020. In addition to easing restrictions, several
factors have acted as key levers. These include the substantial adaptation by households,
firms and institutions to living with COVID-19 and with less mobility; the strong support of
extraordinary global economic policies; and the dynamism of international trade, especially
in goods.
In any case, according to the latest IMF projections, GDP in Q4 was still 3% below its level
a year earlier in the advanced economies.
And the strength of the recovery varies significantly across countries and sectors. By the
end of 2020, output losses were markedly larger in the United Kingdom and the euro area
(7.8% and 4.9%, respectively) than in the United States (2.5%) and Japan (1.3%).
The euro area is lagging behind in the recovery. Second and successive waves of the
pandemic after the summer were particularly severe and containment measures were then
stepped up in a large number of euro area countries. Unlike other advanced economies,
euro area GDP contracted in 2020 Q4, by 0.7%. Incoming economic data, surveys and
highfrequency indicators suggest that economic activity might have contracted again in the first
quarter of this year, before resuming growth in the second quarter, according to the most
recent forecast of the ECB.
Despite recent unfavourable developments, though, the observed fall in the final quarter of
last year was smaller than expected at the time of the December Eurosystem's forecast1.
The economy is showing greater resilience as the pandemic unfolds. This may reflect more
targeted restrictions with the support of preventive health measures and a better
understanding of the transmission of the virus, while households and firms seem to have
adapted to the pandemic environment. They have done so, in part, by adopting available
technologies, which have enabled a considerable increase in e-commerce and other digital
services and teleworking.
On the supply side, the extension of the pandemic and the targeted nature of containment
measures has led to an increasing gap between sectors. The impact has been more severe
and persistent in contact-intensive services, which have suffered sharp setbacks during the
second and successive waves. For instance, trade, transport and hospitality activities
recorded quarterly losses of over 4% in Q4. The quarterly fall rises to 12%in the case of
leisure, cultural and other personal services. By contrast, manufacturing in the euro area
has recovered rapidly, benefiting not only from more targeted restrictions, but also from the
pick-up in foreign trade in goods. Gross value added in manufacturing increased by around
3% in the last quarter of the year practically reaching pre-crisis levels, while activity in
vulnerable services sectors was near 15% below its pre-crisis level. Moreover, this sectoral
gap will likely have widened further in 2021 Q1. Consequently, the economies most
dependent on these service branches are liable to face more lasting effects and a slower
and more uncertain recovery.
On the demand side, the fall in output in Q4 was mainly due to domestic demand. In
particular, the weakness of private domestic consumption has been the key determinant of
output dynamics throughout 2020. This is mainly due to the inability of households to fulfil
part of their usual expenditures because of the restrictions imposed by the pandemic. In
fact, the health crisis has led to an extraordinary increase in household savings in the major
advanced economies. The household saving rate in the euro area stood at close to 20% of
gross disposable income (GDI) in Q4, up from 17% in Q3 and well above pre-crisis savings
levels of less than 13% of GDI. Taking the year as a whole, excess saving, measured as the
difference between current savings and the average over the previous five years, amounts
to around 5 percentage points of GDP. A significant portion of this excess saving has built
up in the form of bank deposits. Looking forward, the partial release of the private saving
reservoir accumulated could provide greater momentum to the future recovery in
consumption, although uncertainty here remains considerable.
Looking ahead, the progressive roll-out of vaccines should allow for a gradual relaxation of
containment measures and should pave the way for a firm rebound in economic activity that
should become more clearly visible in the second half of this year. In any case, the outlook
for economic activity should be supported by the continuation of substantial monetary and
fiscal policy stimuli (including Next Generation EU funds), as I will elaborate on in the second
part of this talk, and better prospects for global demand.
Compared to the situation a few months ago, external demand is now expected to be
stronger. In addition to better than expected growth data at the end of 2020, two elements
point to a more positive international scenario: the EU-UK trade agreement and the
extraordinary fiscal measures approved in some major economies, notably in the United
States.
In general, the dynamism of international trade is acting as an important lever for the
recovery of the euro area economy, given its high degree of trade openness. Unlike in the
aftermath of the 2008 global financial crisis, world trade in goods has recovered rapidly from
the disruptions to trade flows in the first half of 2020, largely driven by the buoyancy of the
Chinese economy.
This improvement in the euro area's external demand contributes to offsetting the negative
effect on activity derived from the resurgence of infections and the restrictive measures
adopted to combat them, as well as from rising oil prices. Thus, the outlook for economic
activity remains broadly unchanged compared with that in December. The March ECB staff
macroeconomic projections foresee real annual euro area GDP growth of 4.0% in 2021,
4.1% in 2022 and 2.1% in 2023. Euro area GDP would exceed its pre-crisis level in 2022
Q2, one quarter earlier than projected in December.
Recent economic prospects set out by the IMF confirm this outlook for the euro area.
According to the April World Economic Outlook (WEO), euro area GDP will increase by 4.4%
in 2021 and 3.8% in 2022, slightly higher than previous projections released in January.
Comparing with the global economy, the speed of the recovery is relatively slow in the euro
area, with large differences also between euro area countries. According to the IMF's latest
forecast, Germany's GDP is expected to be above its pre-crisis level next year, more than
six months later than the United States, while the Banco de España's latest projections
foresee that Spain will not reach that level until 2023 in the baseline scenario.
In any case, uncertainty remains high and most projection exercises develop alternative
moderate and severe scenarios depending on how the health crisis unfolds. In the short
term, uncertainty is largely linked to the path of vaccination rates and to the efficiency of
vaccines with respect to the new strains of the virus. Hence, although medium-term risks
remain more balanced, uncertainties over the near term continue to be tilted on the
downside.
Moving to the inflationary situation, the health crisis intensified disinflationary pressures
globally. Economic weakness in 2020 put downward pressure on global inflation rates in a
context of sizeable negative output gaps and declining commodity prices. Moreover, in the
euro area, some specific factors pushed inflation rates down, to particularly low levels in
2020 (0.3% on average). These factors include the appreciation of the euro and the
temporary reduction in value added tax in Germany from July to December 2020.
SlAt the beginning of 2021, we have observed a substantial but transitory increase in euro
area consumer inflation. According to Eurostat's flash estimate, HICP inflation stood at
1.3% in March, up from -0.3% in December 2020. This increase reflects a number of
idiosyncratic factors, including the increase in energy prices, the end of the temporary VAT
reduction in Germany and disruptions to the sales season calendar in several euro area
countries due to pandemic restrictions that are not expected to persist over time. In addition,
there are transitory effects linked to the changes made to HICP weights at the beginning of
each year, which have been much larger than usual this year reflecting strong shifts in
household consumption patterns during the pandemic last year. These weight changes will
bring about substantial volatility in inflation figures in the course of 2021, but are not
expected to have a sizeable impact on the year as a whole.
The rise in inflation rates at the beginning of the year and the increase in oil prices have
caused the expected path of inflation to be revised upwards, notably for 2021. According
to the ECB March macroeconomic projections, inflation in the euro area will reach 1.5% in
2021, peaking at 2% in 2021 Q4. However, in the medium term, the persistence of negative
output gaps and high unemployment rates means that underlying inflationary pressures are
not expected. Euro area inflation is projected to fall to 1.2% in 2022 and increase to 1.4%
in 2023,2 very much in line with recent IMF forecasts.
It is worth emphasising that the recent behaviour of alternative indicators of inflation
expectations does not contradict this assessment. Although market-based indicators of
inflation expectations have been on the rise, they remain far from the target for long-term
horizons. In particular, the inflation expectation measure derived from the 5-years-in-5-years
inflation swap was hovering around 1.1% in 2020, it increased to 1.4% during Q1 this year,
and it has reached 1.5% in April, a level last seen in early 2019. Moreover, as I later note,
care must be taken in the interpretation of these indicators, as they contain sizeable and
volatile inflation risk premia. In addition, according to the latest ECB Survey of Professional
Forecasters (SPF), conducted in January, longer-term inflation expectations remain stable
around 1.7%.
Reflections on monetary policy
Allow me now some reflections on monetary policy in the euro area. I will focus on our
communication since last December, in particular our pledge to preserve favourable
financing conditions and how this should be interpreted in the light of the outlook I have just
discussed.
First, let me provide some background by summarising briefly how the ECB's monetary
policy has responded to the pandemic crisis.3
Broadly speaking, our measures can be grouped into two main categories. The first relates
to our longer-term refinancing operations. Within this group, a key measure was the
improvement last year of the conditions of our targeted longer-term refinancing operations
(TLTROs), which allow euro area banks to borrow long term at exceptionally low -in fact,
negative- interest rates: these can be temporarily as low as -1%, provided banks maintain
their eligible lending to firms and households during the pandemic crisis. With our TLTRO
recalibration, we aimed to preserve the provision of credit to the real economy throughout
the pandemic period. Indeed, bank credit is crucial for the financing of households and
nonfinancial corporations in the euro area, especially small and medium-sized enterprises.
The massive take-up in the TLTRO operations conducted since the start of the pandemic
proves that their conditions were indeed very favourable. A notable example is the June
2020 operation, in which banks received a total of 1.3 trillion euro, a record high for
Eurosystem refinancing operations. Also, the available evidence suggests that banks
participating in the TLTROs have indeed already used part of the funding received to lend
to firms and households.4 In order to reinforce the effectiveness of these measures, we also
relaxed the Eurosystem collateral framework, with the aim of increasing the amount of funds
that banks could obtain in the TLTROs and the other Eurosystem refinancing operations.
The second group of measures is related to our asset purchase programmes. Here, the
most important measure was the introduction of our pandemic emergency purchase
programme (PEPP) in March last year. With an initial envelope of 750 bn euro, the
subsequent recalibrations in June and December raised it to 1.85 trillion euro. The PEPP
differs from our longer-standing asset purchase programme (APP) in its flexibility as regards
the distribution of net purchases over time and across jurisdictions.
This flexibility, together with the programme's size, has been important for ensuring
favourable financing conditions for all agents in the euro area. It was also instrumental in
heading off the incipient financial fragmentation observed at the onset of the pandemic, thus
ensuring a smooth transmission of our monetary policy to all euro area countries. PEPP has
also provided fiscal authorities with space to extend and maintain their support measures
for the economy. By way of illustration, net asset purchases under the PEPP in 2020 reached
an amount equivalent to over 90% of euro area countries' net public financing needs that
same year (and almost 30% of gross needs), according to preliminary estimates. This is
particularly important in countries such as Spain, which has been particularly affected by
the COVID-19 crisis and whose initial deficit and public debt levels were high. The ECB's
actions are heading off an increase in financing costs which could have significantly curbed
the national fiscal authorities' capacity to support the economy.
Since its creation, the PEPP has become the main tool for adjusting our monetary policy
stance in the context of the COVID-19 crisis. Indeed, one of the key objectives of the PEPP
is to counter the downward impact of the pandemic on the projected path of inflation. This
objective has guided the recalibration over time of the PEPP's envelope and the horizon of
net purchases. For instance, in view of the pandemic-related downward revision to the
medium-term growth and inflation outlook in the Eurosystem's macroeconomic projections,
in June last year we at the ECB Governing Council decided to raise the PEPP envelope by
650 bn euro and to prolong the net purchase horizon until June 2021.
Likewise, in December last year we increased the PEPP envelope by a further 500 bn euro
and extended the period of net purchases until March 2022, in view of staff projections
showing a more protracted weakness in inflation than previously envisaged.
It was also in December that we introduced in our communication our pledge to conduct
purchases under the PEPP to preserve favourable financing conditions over the extended
net purchase period. In particular, we committed to purchasing flexibly with a view to
preventing a tightening of financing conditions that is inconsistent with countering the
downward impact of the pandemic on the projected path of inflation.
This commitment makes explicit the role of financing conditions as an intermediate goal,
but is also a reminder that the ultimate goal of PEPP, as far as its monetary stance function
is concerned, is to counter the negative impact of the pandemic on our medium-term
inflation projections.
So how is our commitment to maintain favourable financing conditions to be interpreted in
practice? It is instructive to break our commitment into two parts.
The first entails a pledge to avoid a tightening in financing conditions. What do we mean
exactly by "financing conditions"? As we explained after our March monetary policy
meeting, financing conditions are defined by a holistic and multifaceted set of indicators,
spanning the entire transmission chain of monetary policy from risk-free interest rates and
sovereign yields to corporate bond yields and bank credit conditions. This does not mean,
however, that all indicators are equally relevant from the perspective of our monetary policy
making. In particular, banks use risk-free interest rates and sovereign bond yields as key
references for determining credit conditions. Unlike many other indicators, they are available
in real time, they are closely linked to other relevant prices in the financial markets and
monetary policy transmission channels, and they can be controlled, at least partially,
through central bank actions. In other words, they are uniquely positioned between our tools
and the financial variables we wish to influence. What we observe today in relation to interest
rates informs us of the foreseeable effect our monetary policy measures will have, such that
they may guide the purchases we make today. Sizeable and persistent increases in these
market interest rates, if left unchecked, could translate into a premature tightening of
financing conditions for all sectors of the economy. Therefore, risk-free interest rates and
sovereign yields are especially important to assess the favourability of financing conditions.
In this regard, from past December until March we witnessed an increase in euro area
longterm risk-free interest rates and sovereign yields. This represents a tightening in financing
conditions. So how did we react to this?
This takes me to the second part of our "favourable financing conditions" commitment,
namely our pledge to counter the downward impact of the pandemic on the projected path
of inflation. In this regard, the medium-term inflation outlook in the ECB and Eurosystem
macroeconomic projection exercises is the key criterion that allows us to judge whether a
tightening in financing conditions is inconsistent with countering the negative impact of the
pandemic on inflation. To the extent that an increase in interest rates is not accompanied
by a return of the medium-term inflation projection back to its pre-pandemic level, PEPP
purchases should be adjusted in order to counter such increase in interest rates.
Our decision on 11 March to step up the pace of PEPP purchases during the following
quarter was indeed based on a joint assessment of financing conditions and the inflation
outlook, as explained in the introductory statement after our Governing Council meeting. At
the time of that meeting, the aforementioned tightening of financing conditions had already
materialised. Moreover, the March ECB macroeconomic projections showed no
improvement in the medium-term inflation projection compared to that in December. More
importantly, this projection, at 1.4%, remained below its pre-pandemic level, which stood
at 1.6% according to the December 2019 Eurosystem projections. Thus, in a context of
tighter financing conditions and subdued medium-term inflation projections that remained
below pre-pandemic levels, we decided to make use of the PEPP's flexibility and accelerate
its pace of purchases.
In yesterday's ECB's Governing Council meeting we revised thoroughly the evolution of the
economic and financial context since March. The scenario consistent with that revision is
one in which the economic evolution since March broadly confirms the outlook embedded
in the projections for growth and inflation published then, the balance of risks remains
largely intact as well, and the euro area financing conditions have remained broadly stable
after the increase in market interest rates earlier in the year. At the same time, we recognise
that risks to wider financing conditions remain, so that the Governing Council decided to
reconfirm its very accommodative monetary policy stance, including our expectation that
purchases under the PEPP over the current quarter will continue to be conducted at a
significantly higher pace than during the first months of the year.
Thus, within this framework the pace of purchases under PEPP is determined considering
current- and forward-looking, not backward-looking, indicators. In particular, the joint
assessment that will preside over the setting of the pace of PEPP will be based on the
present state of financing conditions benchmarked against the future expected path of
inflation. And, therefore, the past pace of purchases are by no means a conditioning factor
in the PEPP pace decision-making. As a result, if favourable financing conditions can be
maintained through asset purchase flows that do not exhaust the envelope over the horizon
of the PEPP, the envelope need not be used in full. Equally, the envelope can be recalibrated
and upscaled if required to maintain favourable financing conditions to help counter the
negative pandemic shock to the path of inflation.
Finally, inflation linked swap (ILS) rates can also be used to construct a real yield curve for
the euro area, by subtracting them from the nominal yield curve. Indeed, the real yield curve
is another relevant indicator of financing conditions, insofar as spending decisions are
based on the real (i.e. inflation-adjusted) cost of funding. Since our December meeting, real
long-term yields have first increased -as inflation compensation failed to match the rise in
nominal yields- and then mostly reversed their previous rise -as inflation compensation rose
but nominal yields remained stable at the new higher levels. In my view, as long as our
medium-term inflation projections do not show a clear improvement, with a view to assisting
the recovery in economic activity and hence in the inflation outlook, we should
accommodate increases in market-based long-term inflation expectations measures in
order to ensure that they translate into lower long-term real interest rates.
Lessons from recent developments for the ECB's review of its monetary policy
strategy
In this last part of my intervention, I would like to draw some possible lessons for our ongoing
review of the ECB's monetary policy strategy. To this end, it is very instructive to look at
economic and monetary policy developments in the United States since the summer of last
year, for two reasons. First, the US Federal Reserve (henceforth 'the Fed') announced last
August the outcome of its own review of its monetary policy strategy. Second, the US
inflation outlook has improved considerably since then. Let me first discuss both aspects
and how they may be interconnected.
To recall, one of the key modifications adopted by the Fed was to introduce the following
element in its strategy: "following periods when inflation has been running persistently below
2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above
2 percent for some time". That is to say, the Fed now explicitly allows for the possibility of
letting inflation overshoot temporarily its 2 percent target following periods of persistent
undershooting.
The logic of this strategy comes from the existence of a lower bound on nominal interest
rates, which constrains central banks' ability to reach their inflation targets: once the nominal
interest rate hits its lower bound, the central bank can no longer provide stimulus by cutting
it further. As an example, with the arrival of the pandemic the US experienced last year a fall
in inflation and a sharp increase in unemployment, to which the Fed responded by lowering
the range for the federal funds rate -its key operating target- until the bottom of the range
hit zero.
These strategies are useful in such contexts through two channels. First, by signalling
willingness to let inflation overshoot its target, the central bank can bring about expectations
of higher inflation in the future -at least to the extent that this strategy is understood and
believed by the public, and inflation expectations are forward-looking. This reduces real
interest rates -i.e. nominal interest rates minus inflation expectations-, which stimulates
aggregate spending and inflation. Second, this strategy entails, ceteris paribus, a
commitment to keeping nominal interest rates at their lower bound for longer. This translates
into lower medium- and long-term yields, thus easing financing conditions and further
stimulating spending and inflation.5
Let me now turn to the second reason for looking at the US: the improvement in its inflation
outlook since the Fed's strategy review. Short- and medium-term inflation expectations, as
measured by the Federal Open Market Committee (FOMC) projections, have increased in a
sustained manner since September last year, to the point that the most recent projections,
from March, see inflation at or slightly above the 2 percent target for the entire projection
horizon (2021-2023).
Market-based indicators of US medium-term inflation, such as 2-year-in-2-years ILS rates,
show an even sharper increase and now hover around 2.5%, although as I said before it is
difficult to ascertain to what extent this reflects genuine expectations of higher inflation.
The improvement in the US inflation outlook reflects the likely inflationary impact of the fiscal
stimulus packages approved since December, as well as the overall economic recovery
from the pandemic crisis and possible supply bottlenecks. An additional factor is a transitory
push from higher energy prices; however, core inflation, which is stripped from the direct
impact of energy prices, is also projected to be at or slightly above target over the FOMC's
projection horizon.
How do these two aspects, the Fed's new strategy and the rise in US inflation expectations,
relate to each other? My interpretation is that they are closely interrelated. A given
inflationary shock, such as a large fiscal expansion, is more likely to raise inflation
expectations if agents understand and believe the central bank's willingness to let inflation
overshoot its target in the future. The aforementioned FOMC projections of inflation at or
slightly above target over the coming years is consistent with this scenario. Moreover, the
median FOMC projection sees the federal funds rate remaining at its lower bound for the
entire projection horizon. This projection for the appropriate path of the Fed's nominal
interest rate policy can also be interpreted as consistent with the Fed's willingness to
tolerate above-target inflation in the future, and to shape its policy accordingly by refraining
-in expected terms- from raising its key interest rate even as inflation is projected to (slightly)
overshoot its target.
So what can we learn from the US experience for our own review of the ECB's monetary
policy strategy? The previous discussion exemplifies the advantages of allowing for
moderate and temporary overshoots in inflation in an environment of persistent below-target
inflation and nominal interest rates at or close to their lower bound, such as that
characterising the euro area over the last years.
Now, to allow for inflation overshoots to be effective, a prerequisite is the existence of a
clear numerical inflation target. The ECB's current inflation aim, an inflation rate below but
close to 2 percent, does not help in this regard, as it does not identify a specific point target
that acts as a focal point. Therefore, an eventual adoption of this kind of strategy would
necessarily have to be accompanied by a clarification of the ECB's inflation aim. A point
target of exactly 2 percent would be a good choice in this regard.
That said, let me warn you that, in actual practice, introducing the possibility of temporary
and moderate inflation overshoots in the monetary policy strategy is likely to have modest
effects on inflation expectations per se. To some extent, markets and the public may only
be willing to revise their inflation expectations upwards if they first see actual inflation
reaching and eventually exceeding its target, which then gives the central bank the
opportunity to make good on -and reaffirm the credibility of- its overshooting commitment.
Alternatively, agents may be more likely to raise their inflation expectations if they see policy
measures that are substantial enough to justify optimism on future price developments.
Either way, communicating the possibility of inflation overshoots has a better chance at
lifting inflation expectations if other accompanying factors provide a good reason to expect
higher inflation in the future. A case in point are the aforementioned US fiscal stimulus
packages, which have undoubtedly contributed to pushing up aggregate demand and lifting
inflation expectations.
This last observation leads me to extract a final lesson from the US experience for the euro
area, namely the crucial role that fiscal policy plays in the current context in supporting the
economic recovery and thus improving the medium-term inflation outlook. Such
improvement would come through different channels. The most obvious one is that a fiscally
driven boost to aggregate demand would put upward pressure on prices. More subtly, if
properly designed, fiscal stimulus packages may raise the economy's potential growth rate
and hence the so-called natural real rate of interest. This would lower the gap between
actual and natural interest rates, thus further supporting aggregate demand and inflation.6
To be clear, European institutions have already made substantial progress on the fiscal
front, by launching the Next Generation EU program. This is undoubtedly an important step
in European integration, which involves an appreciable degree of risk-sharing, since a
significant part of the stimulus is allocated on the basis of the impact of the pandemic on
the economy and around half of the funding takes the form of grants. Moreover, together
with other instruments adopted during the pandemic, such as the loans for financing
temporary unemployment benefits (the SURE programme), it will double the amount of
supra-national European debt available for investors.
However, NGEU cannot and should not be seen as the cyclical stabilisation mechanism the
euro area needs as a complement to the Eurosystem's single monetary policy. A true
macroeconomic stabilisation mechanism should be of a permanent nature and have
sufficient size, taxation power and borrowing ability7.
The NGEU is transitory and does not fulfil all of these properties. First, its size, although
relevant, could prove insufficient to counteract the accumulated GDP falls during the COVID
pandemic. Second, the European Union has so far not approved the necessary revenues to
finance it. Finally, given its transitory nature, it cannot become a permanent source of safe
assets at the European level.
Therefore, in the current circumstances it may be necessary to allow national fiscal
authorities more leeway for pursuing growth-enhancing fiscal policies, while ensuring the
medium-term sustainability of their public finances through credible post-pandemic fiscal
consolidation plans. This connects with the ongoing debate on the possibility of reforming
the EU's fiscal rules, to align them better with the structural economic transformations that
have taken place since they were formulated.
Indeed, the prevailing rules were designed for a completely different economic context. On
the one hand, the secular fall in long-term interest rates means that higher debt levels can
be maintained without compromising public finances in the long run as long as growth
potential is not hampered. On the other hand, the Great Financial Crisis and the COVID
pandemic have proven that tail risks might not be manageable from a national point of view.
In fact, most large countries in the euro area, even following the SGP rules, may lack the
necessary fiscal buffer to confront a recession in the next decade. Therefore, the way
forward will require a new framework in which nationa