Norway emerged from the crisis at the end of the 1980s and the beginning of the 1990s without a persistent fall in employment. This is because wage formation functioned well. Wage determination was coordinated, with substantial emphasis on overall employment. Wage discipline provided the authorities with the leeway to stimulate the economy, with limited risk of higher inflation. This policy yielded positive results. As regards unemployment and inflation in Europe in the 1990s, Norway is among the top performers. There may be many explanations for the wide differences in labour market performance across countries. Historical and cultural factors may play a significant role. On the other hand, certain common features and systematic differences should be duly noted. Among other things, the effectiveness of labour market programmes, the degree of coordination in wage formation, employment protection legislation (EPL), social security schemes and the education system may be important factors. 8  BIS Review 11/2002  As in Norway, labour markets in continental Europe are marked by extensive employment protection legislation, which implies substantial restructuring costs for companies. The higher the level of employment protection, the more an employee is perceived as a long-term investment and the more cautious the employer must be with regard to hiring. On the other hand, a high level of employment protection can motivate employers to develop skills among their employees. With a centralised and coordinated wage formation process, the social partners can take account of overall employment in wage negotiations. The Scandinavian countries and Austria have organised wage determination in this way.

Furthermore, taxpayers should obviously not be liable for any losses incurred by CCPs. Losses should be entirely borne by the CCPs themselves and their participants, in an appropriate and proportional manner, and in line with prudent incentives. In particular, the involvement of indirect participants should be carefully considered: their contribution to the loss allocation process should take into account the fact that they have no contractual agreements with the CCP, and, unlike direct members, have no part in the CCP’s risk governance process (and therefore have no say in the CCP’s risk management). Lastly, the issue of compensating clearing members for losses incurred during a recovery or resolution process remains comparatively unexplored and deserves careful attention.10 Let me now turn to the various tools that authorities could use to address potential shortcomings in CCP risk management and loss-absorption capacities. These options have very different implications, namely in terms of sharing the funding needs between CCPs and participants, and in terms of providing the right incentives to CCPs’ stakeholders. Increasing the level of pre-funded resources held by CCPs to cover default losses beyond the current standards. One possible conclusion from the current review of the international implementation of regulatory requirements, and the analysis and assessments being carried out in parallel, could be that standards regarding margins and stress testing are sufficiently stringent, but are not implemented consistently across CCPs and jurisdictions.