In Italy, with an overall welfare spending ratio of GDP in line with that of the rest of Europe, spending on support for the unemployed, for households, particularly those at risk of falling into poverty, is at a level less than half that of elsewhere in Europe, while spending on pensions is significantly higher. The weakness of the “social shock absorbers” is that relatively high job protection for those in employment is accompanied by weaker protection for those out of work, contrary to what happens in the Nordic models, where the so-called “flexisecurity” combines an extensive social safety net with less job protection. In some countries, even if, 40 years on, the assumptions of that model are still valid, reflections on it began some time ago. Structural factors have changed the context within which the European social model operates: the growing competition from emerging countries, the reorganisation of production processes on a global basis, the speed of innovation, the increasing fragmentation of career paths with ever looser ties to a “permanent position”, the greater instability of families, declining fertility, the prospective decrease in the workforce, an ageing population. The set of risks faced by individuals throughout their life has changed significantly. The social protection systems are therefore constantly evolving; substantial corrections have taken place in recent years in many countries, including France, the United Kingdom and Germany, the country where the reform process began a decade ago.

For example, banks may have domestic currency liabilities but foreign currency assets, and thus may use the FX swap market to source foreign exchange. The spot market, which accounted for about 40 percent of trading activity in 2013, is used by private nonfinancial entities to trade goods and services or to invest in foreign businesses, while banks may use it to engage in cross-border lending and asset managers may use it to purchase financial assets or take positions based on their economic and financial market outlook. The foreign exchange market is a truly global market and one of the few markets that trades around the clock. This gives it the unique ability to provide signals as to how market participants are interpreting or responding to developments taking place in other markets or in the real economy. During the global financial crisis, the foreign exchange market often was the first to reveal how market sentiment was evolving in response to significant events that occurred outside of trading hours in other markets. Such signals can be very useful to policymakers and market participants, particularly during periods of market stress. Of course, the foreign exchange market’s ability to support price discovery and to enable the international flow of goods and capital requires a marketplace that is founded on integrity and capable of ensuring smooth and efficient interaction among market participants. This remains especially important as the structure of the market continues to evolve and adapts to new technologies and financial flows. 1  World Bank Development Indicators; http://data.worldbank.org/data-catalog/world-development-indicators.