The figures on falling employment and rising unemployment in Spain in recent quarters dramatically illustrate how our labour market accentuates the contraction in employment in downturns and acts as the main factor amplifying recessions. As you all know, this is Spain's most negative distinguishing feature relative to other advanced countries. Decidedly, we cannot put off adopting, as soon as possible, reforms to staunch the ongoing rate of dismissals and to promote to the full new hires. It is vital to reform those labour market arrangements whereby the main means for the adjustment of Spanish firms continues to be labour shedding. Here, the current collective bargaining system plays a key role. As it stands, it prevents working and wage conditions from adjusting in a sufficiently differentiated manner to the different labour and productive environments that companies and productive sectors face. The adverse effects of our particular collective bargaining system are not so visible in periods of strong growth, although then, too, they hamper increases in productivity. But in today's circumstances, where the crisis impacts companies and productive sectors very unevenly, such effects mean that the adjustment operates by unnecessarily forcing out a large number of workers from the market. Therefore, at least during the crisis, collective bargaining agreements should be applied flexibly to allow employers and workers to reach temporary agreements within individual companies so that, in these exceptional circumstances, working conditions can be adjusted in exchange for maintaining employment levels or softening reductions. Recent days have seen some agreements along these lines.

  Finally, and most important, many oil and commodity producers face an intertemporal choice between extracting resources and keeping them on or under  BIS Review 120/2010  7  the ground. According to standard economic reasoning (the Hotelling rule), one important determinant is the return earned on financial assets, to be compared to the expected commodity price increase over the long run. The possibility of large valuation losses on financial assets makes it optimal to reduce the rate of extraction, which would durably lower the supply of oil and other commodities. However, there are also practical and conceptual difficulties:   A choice would have to be made as to the true nature of the “super reserve currency”. Would it be a basket of existing monies or a new “fiat” currency? If the “super reserve” is a basket of existing currencies (such as the SDR today) it would basically serve as an instrument for diversification of foreign exchange reserves (or private portfolios), and such a diversification can easily be achieved by using existing currencies. On the other hand, the “super sovereign” could be issued as such as a fiat currency. Then, the international community would have a basic choice. Either the new currency could be made “strong” and never depreciate against any other major existing currencies, which probably means that its supply would be severely restricted. Or, the “super sovereign” would be issued according to pre-specified rules, and depreciation against existing currencies could not be excluded.