the r - g differential was positive and close to 2 percentage points. as i have mentioned before, the medium - term stabilisation of existing government debt levels at around 60 % ( with inflation at 2 % ) was consistent with running a headline deficit of around 3 % of gdp ( see left - hand side figure in slide 4 ). in the current context, however, the observed prevalence of negative r - g differentials ( see the right - hand figure in slide 4 ) would be consistent with government debt levels stabilising at a higher percentage of output. given this situation, it is legitimate to ask whether a government debt level above 60 % is now the correct figure? the question is not easy to answer, and it will depend on national considerations ( the economic fundamentals in the medium - term, the vulnerabilities and resilience of the economy ) and, of course, the prevailing financial and monetary conditions. moreover, the current high levels of government debt evidence the difficulties of transitioning to the medium - term debt anchors. at present, converging towards a debtto - gdp ratio of 60 % would require a substantial fiscal effort over a prolonged time frame. using the historical average values of real growth, inflation and interest rates, the euro area would need to maintain a fiscal surplus of 1. 1 % of gdp over 20 years in order to reduce the debt ratio to 60 % ( see left - hand side figure in slide 5 ). this is substantially higher than the average primary deficit of 0. 4 % of gdp observed since 1995. for this constant fiscal effort to be at more plausible values, the macroeconomic environment would need to be far more favourable than it has been in recent decades. for instance, in order to bring the debt - to - gdp ratio back to 60 % in 20 years while maintaining a primary deficit in line with the historical evidence, real growth in the euro area would have to be twice its historical value ( 1. 3 % on average over 1995 - 2021 ), or alternatively the implicit rate on government debt would have to be half the current one ( see right - hand side figures in slide 5 ). although simplistic, these exercises illustrate the significant effort needed for the transition to the medium - term fiscal targets, and, indirectly, how it would limit fiscal policy ’ s capacity as a stabiliser for the duration of the adjustment process. these are just some of the arguments behind the broad consensus on the need to reform the fiscal

? in particular, how will we effectively train and mentor junior employees? finally, current events demand that we be honest about the times we have not lived up to our own standards of equal justice under law and equal opportunity in our economy. each of us needs to question our role in allowing systemic racism to persist. our colleagues, stakeholders, and the public in general will ask how we will do better in the near term and the long term — and then they will hold us to it. thank you for your kind attention, and thank you again to the union of arab banks for hosting this discussion. 1 lisa kraidin, thomas m. noone, sean o'malley, and summer intern gabe rosen contributed to the preparation of these remarks. 2 board of governors, " federal reserve announces extensive new measures to support the economy, " press release ( mar. 23, 2020 ). 3 federal open market committee statement ( mar. 15, 2020 ). 4 see supra n. 2. see also nicola cetorelli, linda s. goldberg, and fabiola ravazzolo, " how fed swap lines supported u. s. corporate credit market amid covid - 19 strains, " liberty street economics ( june 12, 2020 ). 5 " agencies encourage financial institutions to meet financial needs of customers and members affected by coronavirus, " joint press release ( mar. 9, 2020 ). 6 " federal banking agencies provide banks additional flexibility to support households and businesses, " joint press release ( mar. 17, 2020 ). 7 " federal banking agencies encourage banks to use federal reserve discount window, " joint press release ( mar. 16, 2020 ). 8 12 u. s. c. § 343. 9 information of the primary dealer credit facility ( " pdcf " ) is available on the board of governors'public website and the new york fed's public website. see also antoine martin and susan mclaughlin, " the primary dealer credit facility, " liberty street economics ( may 19, 2020 ). 10 information on the commercial paper funding facility ( " cpff " ) is available on the board of governors'public website and the new york fed's public website. see also nina boyarchenko, richard crump, and anna kovner, " the commercial paper funding facility, " liberty street economics ( may 15, 2020 ). 11 information on the money market mutual fund liquidity facility ( " mmlf " ) is available on the board of governors