in the update to the 2016 economic and financial document ( percentage changes ) 2016 efd update to the 2016 efd current legislation scenario real gdp 0. 8 1. 2 1. 2 1. 2 1. 3 0. 7 0. 8 0. 6 1. 2 1. 3 imports 6. 0 2. 5 3. 2 4. 3 4. 0 6. 0 2. 3 2. 2 3. 2 3. 8 consumption by households and nonprofit institutions 0. 9 1. 4 1. 0 1. 3 1. 4 1. 5 1. 2 0. 4 1. 0 1. 2 general government expenditure - 0. 7 0. 4 - 0. 1 - 0. 4 0. 8 - 0. 6 0. 4 0. 0 - 0. 3 0. 2 investments 0. 8 2. 2 2. 5 2. 8 2. 5 1. 3 1. 9 1. 5 2. 6 2. 8 exports 4. 3 1. 6 3. 8 3. 7 3. 5 4. 3 1. 3 2. 5 3. 3 3. 5 nominal gdp 1. 5 2. 2 2. 6 2. 9 3. 0 1. 4 1. 8 1. 8 2. 9 3. 0 consumption deflator 0. 1 0. 2 1. 8 1. 8 1. 8 0. 0 0. 1 1. 7 1. 7 1. 6 employment ( full - time equivalents ) 0. 8 0. 8 0. 7 0. 7 0. 6 0. 8 0. 9 0. 4 0. 6 0. 8 policy scenario real gdp 0. 8 1. 2 1. 4 1. 5 1. 4 0. 7 0. 8 1. 0 1. 3 1. 2 imports 6. 0 2. 5 3. 8 4. 6 4. 2 6. 0 2. 3 3. 3 3. 4 4. 0 consumption by households and nonprofit institutions 0. 9 1. 4 1. 4 1. 7 1. 6 1. 5 1. 2 1. 0 0. 9 0. 9 general government expenditure - 0. 7 0. 4 - 0. 3 - 0. 5 0. 8 - 0. 6 0. 4 0. 5 - 0. 4 0. 3 investments 0. 8 2. 2 3. 0 3. 2 2. 4 1. 3 1. 9 3. 2 3. 6 3.

relies on capital markets, market infrastructures are of paramount importance. the quality and reliability of both technical infrastructures – payment, clearing and settlement systems – and the organization of trading in public markets directly affect all players. • a more connected world improves risk diversification and makes markets more resilient. but when contagion is actually set off, an interlinked financial system heightens the risk that it may spread more widely. the very channels that in good times enhance resilience may also propagate, and possibly amplify, shocks. interdependence thus requires more international coordination of policies for liquidity provision, regulation and supervision of markets and intermediaries. this would help to impede opportunities for regulatory arbitrage and the situations of moral hazard. 4. challenges for authorities and regulators the recent financial turbulence has posed a number of stiff challenges to monetary authorities and financial regulators. so far, the response has followed a two - pronged strategy : central banks have provided liquidity in order to ensure an orderly functioning of money markets while a number of far - reaching initiatives have been launched in the international fora of cooperation to strengthen the financial system. 4. 1. short - term response to stabilise markets when financial and credit market turmoil produces systemic tensions in money markets, distinguishing between the aims of liquidity provision and the reasons that stand behind the setting of policy interest rates – easy under normal circumstances – becomes more difficult. on the one hand, the actions needed to ensure orderly functioning of the money market may blur monetary policy signals. on the other, decisions on interest rates could be interpreted as revealing major information unknown to the market and hinder its normal functioning. in particular : • recent events have demonstrated that modern central banks, and the ecb in particular, are well - equipped to deal with these problems, at least as far as shortterm money market rates are concerned. since august, the major central banks have provided ample liquidity to the interbank system, keeping short - term rates under control. while very short - term rate volatility has increased significantly since, in the euro area the differential between the overnight and the official rate has generally remained very low, in line with pre - crisis levels. • in the united states, the fed has lowered its target rate twice, for a total of three quarters of a point. in the euro area, meanwhile, the policy rate has been kept unchanged. in neither case has day - to -