not withdrawing the support measures prematurely, as that would increase the risk of economic growth enduring more lasting harm ) ; and to help the economy adjust to the post - pandemic scenario. this extraordinarily complex setting also necessitates the definition of a reform agenda aimed at tackling our economy ’ s structural challenges, which have become more pressing with the crisis. lastly, nor should we forget that, after the pandemic, we will have our highest level of public debt in many decades. we must thus accept that the necessary fiscal expansion in the short term should go hand - in - hand with a public finances restructuring plan in the medium term. i shall set out the reasons which, in my view, warrant the urgent launch of an ambitious, comprehensive, permanent and assessable strategy of structural reforms and fiscal consolidation. the strategy must be ambitious. the scale of the challenges the spanish economy faces demands such ambition, if we truly aspire to lay the foundations for sustainable and balanced growth. we should infuse the design and implementation of the reforms with greater impetus, as their credible formulation may positively affect spending, investment and hiring decisions, even in the very short term. fiscal consolidation should be applied once the economy moves back onto a sound growth path, but its definition and early communication would significantly benefit the credibility of our economic policy. the strategy should be comprehensive, taking into account the multiple interactions among the challenges we must face ; such challenges, in many cases, call for international and, in particular, european action. our ambition must be such as to decisively influence these actions. the strategy should be pursued with a view to it lasting. it is therefore vital that there should be a high degree of consensus. in my previously mentioned address to the parliamentary economic committee, i referred to the need for a political agreement spanning several legislatures. i stand by that need today. ultimately, any strategy conceived with a medium - term horizon has to be carefully assessed. adopting this culture of assessment in economic policy design should be one of its pillars. allow me now to give you a brief overview of the impact of the pandemic on economic activity. subsequently, i shall briefly address the content of the economic policy strategy i have just outlined. details of this content are, in any event, in a document i forwarded to the chair of this committee to be distributed among its members. 2. the economic crisis caused by the coronavirus pandemic the pandemic has had an extraord

. in this respect, unwinding the central bank ’ s elevated balance sheet amidst slowly adjusted potential output, will always be economically difficult and politically complicated. of course, there are several options to take, e. g. whether utilize either reverse repo, issuing central bank bill, or start to explicitly declare medium to longer term inflation target. but different consequences may arise from the way those factors are decided and implemented. to begin with, it is important to distinguish between the long term risk and the short term consequences. as i pointed out earlier, the extent to which exit strategies take place is not an easy issue and involving vast complexities as these strategies will always be contradicted with the pace of the recovery itself. problems exist when the perceptions about the exit builds up and feeds up the tail risk where market players are irrationally exuberant in responding the way the recovery runs. first, the perception that the authorities in advanced economies, mainly the fed, will maintain their loosening stance in an extended period has become a sort of long - run certainty. second, the perception that market mechanism will efficiently make automatic correction against shortrun dynamics. as a result, risky asset prices have risen too much, too soon, and too fast compared with macroeconomic fundamental. simply to say, asset price bubbles fueled by this too enthusiastic retort is and will always be our main short - run implication of the speculation builds up around the exit strategy issues. the implications and policy dilemma the impact of major economies ’ exit policy to emeap countries will depend on the degree of openness of a country from the point of view of both trade and financial account. in indonesia, for instance, this financial account channel has become substantial as short term cross border flows has been sizable in domestic financial market. in addition to economic openness of a country, two other aspects that should be taken into account are economic characteristic and policy regime being implemented. in terms of the latent economic characteristics, the nature of the role of each economic sector to gdp, the level of exchange rate pass - through, the role of expectation in inflation formation which would provide unique level of shock absorber specific for each country from global shock. nonetheless, i do believe that the emeap economies are facing similar immediate problem, i. e. how best manage the increasing volatile short - term capital flows stemming from asymmetry in economic recovery between advanced vis - a - vis emerging economies and the policy responses that go with it. thus,