in future. hence, we may conclude that the role of migration, when it comes to addressing population ageing as measured by dependency ratios, is probably limited. certainly, we must bear in mind that there is considerable uncertainty over how fertility, mortality and migration flows will evolve in the coming decades. accordingly, the point estimates of future population levels and dependency ratios must be viewed with some caution. in fact, when the analyses explicitly account for this uncertainty, the results show there is a high degree of variation in the intensity of future population ageing. for example, the scenarios considered by the un population projections, built upon different assumptions on fertility, mortality and migration, suggest that the dependency ratio in europe could range between 43 % and 52 % in 2050 and between 35 % and 61 % in 2070, versus today ’ s ratio of 29 %. in sum, the uncertainty over these demographic projections is sizable, and the more distant the horizon, the greater this uncertainty is. yet acknowledging our limited ability to produce precise forecasts about the future should not lead us to trust in the more benign scenarios eventually materialising. in fact, in the realm of demographic projections uncertainty travels in both directions. while some scenarios point to more moderate population ageing, for instance as a result of higher fertility, others suggest that the dependency ratio could be substantially higher than projected in the baseline. in fact, in countries such as spain and the united kingdom, it has not been uncommon to under - predict life expectancy in successive projection rounds. against this background of demographic change, it is worth examining the multiple effects that an ageing population may exert on the macroeconomy, including the macroeconomic policies that governments and policy - makers implement as a result. macroeconomic implications demographic changes come with wide and profound economic consequences. most relevant for macroeconomic policies are, at least, three such consequences. one is the implication of a smaller and older working - age population for potential growth and inflation. secondly, economies are undergoing a deep structural change, with economic activity shifting across sectors and occupations, which population ageing might accelerate. finally, the balance between savings and investment is calling for lower equilibrium interest rates, with strong consequences for the conduct of monetary and fiscal policies. i will refer to these implications in turn. first, as far as potential growth is concerned, there are several reasons why demography is key. obviously, a lower growth rate of the workingage population implies lower potential output growth, through a direct effect

demographic changes will affect the demand for financial products in various dimensions. first, the demand for credit will diminish due to the reduction in the number of middle - aged individuals since, over the life - cycle, the amount of debt usually peaks at around those ages ( in the range of 25 to 34 years ), falling to very low levels when the reference person of the household is older than 55. additionally, the demand for long - term financial assets will probably increase since working age individuals will need to build up more savings for retirement, against a background in which public pension income might not be sufficient to smooth consumption in the transition to retirement. the flow of funds data actually show that since the beginning of the 21st century the share of financial assets related to retirement in the financial portfolio of euro area households has increased significantly. in particular, the share of pension entitlements plus life insurance and annuity entitlements has risen by more than ten percentage points. currently, the portfolio of euro area households at the age of retirement is tilted towards real estate rather than financial assets, especially in the mediterranean countries. there are, however, various financial products that can be used to extract liquidity from real estate assets. for example, reverse mortgages are loans, guaranteed by the borrower's property, in the form of either a lump sum or a regular income stream until the accumulated debt reaches the loan limit, which is a fraction of the property value. other forms of reverse mortgages include the possibility for borrowers to borrow funds as they need them up to a pre - agreed limit. another option is the so - called sale and leaseback contract. in this case the ownership of the dwelling passes to the cash provider who in turn leases the property back to the seller. some of these products could be combined with annuities, which are insurance products that guarantee an income stream for life. however, in the era of low interest rates the income stream per unit of asset is comparatively low, and tends to decrease even further with the increase in life expectancy. these changes in the demand for financial products could have implications for the structure of the financial system. the traditional role of banks in their intermediation of funds from short - term deposits to loans may diminish. by contrast, the role of non - banks such as investment funds, pension funds and insurance companies may increase since they are in a better position to offer the products that are in higher demand. as a matter of