Annual Report on Structural Reforms 2001 Report addressed to the Council and the Commission 6 March 2001

Full text

(1)

(&2120,&32/,&<&200,77((

Brussels, 6 March 2001 ECFIN/EPC/171/01-EN

$QQXDO5HSRUWRQ6WUXFWXUDO5HIRUPV

(2)

&RQWHQW

3UHIDFH

.H\PHVVDJHVIURPWKH(3&FRXQWU\UHYLHZV

&KDOOHQJHVIRUVWUXFWXUDOUHIRUP 5HFHQWGHYHORSPHQWVDQGFKDOOHQJHVIRUWKHQHDUIXWXUH 6WUXFWXUDOFKDOOHQJHVLQWKHPHGLXPDQGORQJWHUP 6WUXFWXUDOSROLF\LPSOLFDWLRQVRI

WKHNQRZOHGJHEDVHGVRFLHW\

3URJUHVVLQVWUXFWXUDOUHIRUP 0DUNHWVIRUJRRGVDQGVHUYLFHV ,PSURYLQJWKHEXVLQHVVHQYLURQPHQW &DSLWDOPDUNHWV /DERXUPDUNHWVDQGWD[EHQHILWV\VWHPV 3URPRWLQJWKHWUDQVLWLRQWRWKHNQRZOHGJHEDVHGVRFLHW\

,PSOHPHQWDWLRQRIWKH%URDG(FRQRPLF3ROLF\*XLGHOLQHV

$QQH[, %HQHILWVIRUFRQVXPHUVDQGFLWL]HQV

$QQH[,, 7D[EHQHILWUHIRUPV

$QQH[,,, 3URPRWLQJWKHWUDQVLWLRQWRWKH

(3)

3UHIDFH

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

7KH SHHU UHYLHZ H[HUFLVH LQFRUSRUDWHV WKH ´&DUGLII SURFHVVµ IRU PRQLWRULQJ HFRQRPLF UHIRUPLQ0HPEHU6WDWHVZKLFKWKH(FRILQ&RXQFLOODXQFKHGRQ0D\LQRUGHUWR LPSURYHWKHIXQFWLRQLQJRISURGXFWDQGFDSLWDOPDUNHWVLQWKH&RPPXQLW\7KHQDWLRQDO UHSRUWV RQ VWUXFWXUDO UHIRUPV DQG WKH &RPPLVVLRQ·V &DUGLII UHSRUW DUH WKHUHIRUH DQ HVVHQWLDOEDVLVIRUWKHH[DPLQDWLRQV,QWKLVFRQWH[WYDOXDEOHVXSSRUWDQGDGYLFHKDVDOVR EHHQSURYLGHGE\WKH:RUNLQJ3DUW\RQWKH,QWHUQDO0DUNHW+RUL]RQWDO4XHVWLRQV

7KHFRXQWU\H[DPLQDWLRQVDOVRDVVHVVWKHSHUIRUPDQFHRI0HPEHU 6WDWHV· ODERXU PDUNHW SROLFLHVZKLFKDUHDQHVVHQWLDOSDUWRIWKHRYHUDOOHFRQRPLFSROLF\IUDPHZRUN%XLOGLQJRQ WKHMRLQWDQDO\VLVSUHSDUHGLQWKHIUDPHZRUNRIWKH/X[HPERXUJSURFHVVDQGDVUHIOHFWHGLQ WKH-RLQW(PSOR\PHQW5HSRUWDQGWKH(PSOR\PHQW*XLGHOLQHVWKHH[DPLQDWLRQVIRFXVRQ WKRVHSROLF\DUHDVZKHUHWKHLQWHUDFWLRQZLWKRWKHUDUHDVRIHFRQRPLFSROLF\PDNLQJDQG WKHRYHUDOOHFRQRPLFSHUIRUPDQFHLVKLJKHVWHJWKHUHIRUPVRIWD[EHQHILWV\VWHPV

$V LQ SUHYLRXV H[HUFLVHV WKH &RPPLWWHH KDV SDLG SDUWLFXODU DWWHQWLRQ WR D QXPEHU RI SULRULW\VXEMHFWV7KHWRSLFVFKRVHQWKLV\HDUUHIOHFWWKHQHZVWUDWHJLFREMHFWLYHVDJUHHGE\ WKH+HDGVRI6WDWHRU*RYHUQPHQWDWWKHVSHFLDO(XURSHDQ&RXQFLOLQ/LVERQ$FFRUGLQJO\ WKH &RPPLWWHHKDV IRFXVHG RQSROLFLHVWRIDFLOLWDWH WKH WUDQVLWLRQ WR D NQRZOHGJHEDVHG VRFLHW\ UHIRUPV RI WD[EHQHILW V\VWHPV VWUXFWXUDO UHIRUPV DQG EHQHILWV IRU FLWL]HQVFRQVXPHUV6HSDUDWHDQQH[HVDUHGHYRWHGWRWKHVHSULRULW\VXEMHFWV

%\ORRNLQJDWDZLGHUDQJHRIHFRQRPLFSROLF\DUHDVDQGE\HYDOXDWLQJWKHLPSOHPHQWDWLRQ RIWKH%(3*VWKHH[DPLQDWLRQVDQGWKHSUHVHQWUHSRUWFRQWULEXWHWRWKHSUHSDUDWLRQRI WKHPXOWLODWHUDOVXUYHLOODQFHE\WKH&RXQFLODFFRUGLQJWR$UWLFOHRIWKH7UHDW\7KH FRQFOXVLRQVRIWKHH[DPLQDWLRQVDVUHIOHFWHGLQWKLVUHSRUWDUHDOVRVXSSRVHGWRKHOSWKH &RPPLVVLRQDQGWKH&RXQFLOLQWKHSUHSDUDWLRQDQGWKHDGRSWLRQRIWKHQHZVHWRI%(3*V ZKLFKIRUPWKHFHQWUHRIHFRQRPLFSROLF\FRRUGLQDWLRQZLWKLQWKH(XURSHDQ8QLRQ

7KLV\HDU·VSHHUUHYLHZH[HUFLVHZDVFDUULHGRXWLQDZRUNLQJJURXSRIWKH(3&XQGHUWKH &KDLUPDQVKLS RI 3HU &DOOHVHQ ,W LQYROYHG DOO 0HPEHU 6WDWHV WKH (XURSHDQ &HQWUDO %DQN DQG WKH (XURSHDQ &RPPLVVLRQ ZKLFK SURYLGHG VXEVWDQWLDO DQDO\WLFDO LQSXW DQG VXSSRUWIRUWKHZRUNLQJJURXS7KHSUHVHQWUHSRUWLVWKHNH\RXWSXWRIWKHH[DPLQDWLRQV,W ZDV DGRSWHG E\ WKH (3& RQ 0DUFK DQG VXEPLWWHG WR WKH (FRILQ &RXQFLO IRU WUDQVPLVVLRQWRWKH+HDGVRI6WDWHRU*RYHUQPHQWIRUWKHLU6WRFNKROPPHHWLQJ

6HH&RXQFLO'HFLVLRQRI6HSWHPEHURQWKHFRPSRVLWLRQDQGWKHVWDWXWHVRIWKH(FRQRPLF3ROLF\ &RPPLWWHH(&2-/S

(4)

.H\PHVVDJHVIURPWKH(3&FRXQWU\UHYLHZV

7KH VSHFLDO (XURSHDQ&RXQFLO LQ /LVERQ RQ (PSOR\PHQW HFRQRPLF UHIRUP DQG VRFLDO FRKHVLRQ²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·VUHYLHZWKHXVHRIVWUXFWXUDOLQGLFDWRUVSURYHGWREHYHU\XVHIXO,QWKHIXWXUHWKHVH DJUHHGLQGLFDWRUVVKRXOGEHXVHGHYHQPRUHLQWHQVLYHO\

'HVSLWHWKHDGYDQFHVPDGHE\0HPEHU6WDWHVLQUHIRUPLQJWKHLUHFRQRPLHVPXFKUHPDLQV WREHGRQHLQSDUWLFXODUZLWKUHVSHFWWR

(QVXUHHIIHFWLYHFRPSHWLWLRQDQGWKHFRPSOHWLRQRIWKHLQWHUQDOPDUNHW

,PSURYH WKH DELOLW\ RI EHQHILW V\VWHPV DQG RI ODERXU PDUNHW UHJXODWLRQV DQG LQVWLWXWLRQVWRIDFLOLWDWHKLJKHPSOR\PHQW

,PSURYHWKHTXDOLW\DQGHIILFLHQF\RISXEOLFUHJXODWLRQDGPLQLVWUDWLRQDQGVHUYLFHV 6SHHGXSWKHWUDQVLWLRQWRWKHNQRZOHGJHEDVHGVRFLHW\

3URJUHVVLQWKHLPSOHPHQWDWLRQRIVWUXFWXUDOUHIRUP

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

(5)

FRXQWULHV0RUHHIIRUWVDUHDOVRUHTXLUHGWRLQFUHDVHWKHTXDOLW\RIKXPDQFDSLWDODQGWKH OHYHORI5 '

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

,QWKHSUHYLRXV\HDUVVXEVWDQWLDOSHQVLRQUHIRUPVWRRNSODFHLQDIHZ0HPEHU6WDWHV,Q VRPH IXUWKHU VWHSV ZHUH WDNHQ LQ RWKHU 0HPEHU 6WDWHV WR DOOHYLDWH WKH SUHVVXUHV DULVLQJIURPIXWXUHGHPRJUDSKLFFKDQJHVLQYROYLQJVWDJQDWLQJZRUNLQJDJHSRSXODWLRQVDQG D JURZLQJ QXPEHU RI HOGHUO\ FLWL]HQV <HW PRVW 0HPEHU 6WDWHV VWLOO QHHG WR GHYHORS FRPSUHKHQVLYHVWUDWHJLHVWRFRSHZLWKWKHORQJWHUPSXEOLFILQDQFHFKDOOHQJHRIDJHLQJ

7KHQHHGIRUIXUWKHUVWUXFWXUDOUHIRUP

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

&RQWLQXRXVJURZWKDQGVWDELOLW\RULHQWHGPDFURHFRQRPLFSROLFLHVLQFOXGLQJSULFHVWDELOLW\ DSSURSULDWHZDJHGHYHORSPHQWVDQGVROLGSXEOLFEXGJHWSRVLWLRQVFRQVWLWXWHWKHIRXQGDWLRQ IRU IXUWKHU UHIRUP HIIRUWV +RZHYHUGHVSLWHKLJKXQHPSOR\PHQW LQ PDQ\ FRXQWULHV DQG UHJLRQV DQG UHODWLYHO\ VORZ RYHUDOO SURGXFWLYLW\ JURZWK WKH HPHUJHQFH RI VNLOOVKRUWDJHV DQGODERXUPDUNHWSUHVVXUHV VKRZ WKDWODUJHVWUXFWXUDO SUREOHPV UHPDLQ DQG QHHG WR EH VROYHG7RPHHWWKHVHFKDOOHQJHVSURGXFWLYLW\DQGODERXUVXSSO\PXVWEHLQFUHDVHG

3RVLWLYH HIIHFWV ZLOO RQO\ PDWHULDOLVH LI WKH SROLWLFDO FRPPLWPHQW WR VWUXFWXUDO UHIRUPV LV WUDQVODWHGE\0HPEHU6WDWHVLQWRGLUHFWDQGVSHFLILFDFWLRQ7KHFRXQWU\UHYLHZSURFHVVKDV LGHQWLILHG WKH IROORZLQJ DUHDV RI VWUXFWXUDO UHIRUP ZKHUH IXUWKHU DFWLRQ LV SDUWLFXODUO\ UHTXLUHG

(QVXUHHIIHFWLYHFRPSHWLWLRQDQGFRPSOHWLQJWKHLQWHUQDOPDUNHW

(6)

LQDOUHDG\OLEHUDOLVHGQHWZRUNLQGXVWULHVDVZHOODVLQVHFWRUVVXFKDVEXVLQHVVVHUYLFHV 7KH UROH RI FRPSHWLWLRQ DXWKRULWLHV VKRXOG EH VWUHQJWKHQHG WKHLU HIIHFWLYH LQGHSHQGHQFH VHFXUHG DQG WKH FRRSHUDWLRQ DW &RPPXQLW\ OHYHO VWUHQJWKHQHG 7KH ILQDQFLDOVXSHUYLVRU\DXWKRULWLHVQHHGWRFRRSHUDWHDVPHUJHUVFRQWLQXHDFURVVDFWLYLWLHV DQGFRXQWULHV

,PSURYH WKH DELOLW\ RI EHQHILW V\VWHPV DQG RI ODERXU PDUNHW UHJXODWLRQV DQG LQVWLWXWLRQVWRIDFLOLWDWHKLJKHPSOR\PHQW

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

,PSURYH WKH TXDOLW\ DQG HIILFLHQF\ RI SXEOLF UHJXODWLRQ DGPLQLVWUDWLRQ DQG VHUYLFHV

7KHUH LV D VWURQJ QHHG WR IXUWKHU UHGXFH WKH DGPLQLVWUDWLYH EXUGHQ DQG EDUULHUV IRU EXVLQHVV LQWURGXFH VLPSOHU DQG PRUH WUDQVSDUHQW SURFHGXUHV RQHVWRS VKRSV IDVWHU DQGHDVLHUEXVLQHVVVWDUWXSVDQGWKHVLPSOLILFDWLRQRIEXVLQHVVWD[V\VWHPV7KHTXDOLW\ DQG HIILFLHQF\ RIWKH SXEOLFDGPLQLVWUDWLRQ DQG SURYLVLRQ RI VHUYLFHV IRU FLWL]HQV DOVR QHHGV WR EH LPSURYHG $PRQJ WKH UHPHGLHV DUH EHWWHU PDQDJHPHQW EHQFKPDUNLQJ V\VWHPDWLFHYDOXDWLRQVWKHXVHRIQHZWHFKQRORJLHVDQGH[SRVXUHWRFRPSHWLWLRQ

6SHHGXSWKHWUDQVLWLRQWRWKHNQRZOHGJHEDVHGHFRQRP\

(7)

6SHFLILFFRQFOXVLRQVIURPWKHFRXQWU\UHYLHZSURFHVV

7KH FRXQWU\ UHYLHZ SURFHVV IRFXVHV RQ VWUXFWXUDO UHIRUP RI JRRGV VHUYLFHV FDSLWDO DQG ODERXUPDUNHWVDVZHOODVORQJWHUPSXEOLFILQDQFHVDQGWKHLQWHUDFWLRQEHWZHHQVWUXFWXUDO UHIRUPDQGPDFURHFRQRPLFSROLFLHV$VLQSUHYLRXV\HDUVSDUWLFXODUDWWHQWLRQKDVEHHQSDLG WRVHOHFWHGSULRULW\VXEMHFWV7KLV\HDU·VWRSLFVDUHSROLFLHVWRIDFLOLWDWHWKHWUDQVLWLRQWR WKHNQRZOHGJHEDVHGVRFLHW\UHIRUPVRIWD[EHQHILWV\VWHPVWRSURPRWHHPSOR\PHQW DQGVWUXFWXUDOUHIRUPVDQGEHQHILWVIRUFLWL]HQVDQGFRQVXPHUV:LWKUHVSHFWWRODERXU PDUNHWVWKHUHYLHZIRFXVHGRQWD[EHQHILWLVVXHVDQGUHIRUPVRIODERXUPDUNHWUHJXODWLRQV DQG LQVWLWXWLRQV DFNQRZOHGJLQJ WKH FRPSUHKHQVLYH H[DPLQDWLRQ RI RWKHU ODERXU PDUNHW LVVXHVZLWKLQWKH/X[HPERXUJSURFHVV

*RRGVDQGVHUYLFHVPDUNHWV

• 0HPEHU6WDWHV KDYH PDGH SURJUHVV LQ WKH WUDQVSRVLWLRQ RIVLQJOH PDUNHW GLUHFWLYHV DQG IRUPDOLVHG SURFHGXUHV KDYH EHHQ HVWDEOLVKHG LQ D QXPEHU RI FRXQWULHV <HW VRPH 0HPEHU6WDWHVPXVWLPSURYHWKHLUUHFRUG2SHQLQJSXEOLFSURFXUHPHQWWRFRPSHWLWLRQLV RQO\SURJUHVVLQJJUDGXDOO\DQGGHVSLWHVRPHPHDVXUHVEHLQJLQWURGXFHGWKHUHLVOLWWOH HYLGHQFHRIQRWDEOHHIIHFWV

5HGXFWLRQVRIWKHRYHUDOOOHYHOVRIVWDWHDLGDUHFRQWLQXLQJDQGDLGLVJUDGXDOO\EHLQJUHGLUHFWHG WRZDUGVKRUL]RQWDOREMHFWLYHV+RZHYHUVRPH0HPEHU6WDWHVVKRXOGPDNHDQHIIRUWWR UHGXFHLQSDUWLFXODUDLGWRVSHFLILFVHFWRUV

•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

• 5HIRUPV DLPLQJ DW KLJKHU TXDOLW\ DQG HIILFLHQF\ RISXEOLF VHUYLFHV LQ DUHDV VXFK DV HGXFDWLRQ DQG KHDOWK DUH EHLQJ PDGH LQ DOO 0HPEHU 6WDWHV <HW SURJUHVV DSSHDUV JHQHUDOO\ WR EH PRGHVW .H\ DUHDV WR EH GHYHORSHG LQFOXGH EHWWHU PDQDJHPHQW EHQFKPDUNLQJ V\VWHPDWLF HYDOXDWLRQV XVH RI QHZ WHFKQRORJLHV SULYDWH VHFWRU LQYROYHPHQWDQGH[SRVXUHWRFRPSHWLWLRQ

• 6HYHUDO 0HPEHU 6WDWHV KDYH UHFHQWO\ SUHVHQWHGORQJWHUP LQYHVWPHQW SODQV WR UHYHUVH D GRZQZDUG WUHQG LQ SXEOLF LQYHVWPHQW 7UDQVSRUW DQG FRPPXQLFDWLRQV LQIUDVWUXFWXUH DQG HGXFDWLRQ IHDWXUH KLJK RQ WKH DJHQGD3XEOLFSULYDWH SDUWQHUVKLSV DUH H[SHFWHG WR FRQWULEXWHWRWKHUHDOLVDWLRQRIWKHLQYHVWPHQWSODQV$FORVHUFRRSHUDWLRQEHWZHHQWKH SXEOLFDQGWKHSULYDWHVHFWRUVVKRXOGQRWEHDOORZHGWROHDGWROHVVFRPSHWLWLRQ

(8)

• ,QHQHUJ\VHFWRUV(8GLUHFWLYHVKDYHEHHQLQFRUSRUDWHGLQWRQDWLRQDOOHJLVODWLRQLQPRVW 0HPEHU6WDWHVDQGWKHRSHQLQJRIPDUNHWVLVSURJUHVVLQJ<HWWKHSDFHRIOLEHUDOLVDWLRQ FRXOG EH DFFHOHUDWHG LQ PDQ\ 0HPEHU 6WDWHV (IIRUWV DUH VWLOO UHTXLUHG WR HQVXUH HIIHFWLYHFRPSHWLWLRQLQWKHVHPDUNHWVDQGDWWKH(8OHYHOPHDVXUHVDUHQHHGHGIRUWKH IXOOFRPSOHWLRQRID(XURSHDQHQHUJ\PDUNHWZLWKRXWERUGHUV

• $IHZLQLWLDWLYHVLQFUHDVLQJFRPSHWLWLYHSUHVVXUHKDYHEHHQWDNHQE\GLIIHUHQW0HPEHU 6WDWHV LQRWKHU QHWZRUN LQGXVWULHV LQFOXGLQJ SRVWDO VHUYLFHV UDLOZD\V DQG RWKHU SXEOLF WUDQVSRUW(IIRUWVDUHUHTXLUHGWRLQWURGXFHPDUNHWEDVHGPHFKDQLVPVLQWKHVXSSO\RI SXEOLFXWLOLWLHV'HVSLWHWKHFKDOOHQJHVH[SHULHQFHVRIVRPH0HPEHU6WDWHVVKRZWKDW RSHQLQJWKHVHPDUNHWVWRFRPSHWLWLRQLVSRVVLEOHDQGZKHQSURSHUO\KDQGOHGGRHVQRW FRPSURPLVHXQLYHUVDOVHUYLFHREOLJDWLRQV

3ULYDWLVDWLRQ RI VWDWHRZQHG FRPSDQLHV FRQWLQXHV JUDGXDOO\ LQ SDUWLFXODU LQ 0HPEHU 6WDWHV ZKHUH VWDWH RZQHUVKLS KLVWRULFDOO\ KDV EHHQ KLJK 0DNLQJ PDUNHWV FRQWHVWDEOH ZKHUH VWDWH HQWHUSULVHV XVHG WR KDYH PRQRSROLHV LV LPSRUWDQW WR HQVXUH DQ HTXDO SOD\LQJILHOG

• ,PSRUWDQW LQLWLDWLYHV WR UHGXFH VLPSOLI\ DQG DVVHVVDGPLQLVWUDWLYH EXUGHQV RQ HQWHUSULVHV

KDYHEHHQLQWURGXFHGLQDOO0HPEHU6WDWHV7KHVHLQLWLDWLYHVQHHGWREHIROORZHGXS VWURQJO\$YDULHW\RIPHDVXUHVKDYHEHHQLPSOHPHQWHGWRHQFRXUDJHHQWUHSUHQHXUVKLSDQG VXSSRUW60(VLQFOXGLQJUHGXFWLRQVLQWD[EXUGHQV6RPH0HPEHU6WDWHVKDYHFKDQJHG EDQNUXSWF\ODZVZLWKDYLHZWRJLYHHQWUHSUHQHXUVDVHFRQGFKDQFH

%HQHILWVIRUFRQVXPHUVDQGFLWL]HQV

• 7KHRYHUULGLQJREMHFWLYHRIVWUXFWXUDOUHIRUPLVWRVHFXUHEHQHILWVIRUFRQVXPHUVDQGFLWL]HQV

WKURXJK PRUH HPSOR\PHQW RSSRUWXQLWLHV ORZHU SULFHV DQG D JUHDWHU YDULHW\ RI SURGXFWV )LUP DQG HIILFLHQW OHJLVODWLRQ LV UHTXLUHG WR HQVXUH WKDW SXEOLF VHUYLFH REOLJDWLRQVDUHVDWLVILHGWKDWVXIILFLHQWWUDQVSDUHQF\LVDYDLODEOH DQGWKDW WUDQVDFWLRQV FDQEHSHUIRUPHGVDIHO\IURPWKHSRLQWRIYLHZRIWKHFRQVXPHU&RPSHWLWLRQSROLF\ PD\WKHUHIRUHEHUHJDUGHGDVDQLPSRUWDQWHOHPHQWRIRYHUDOOFRQVXPHUSROLF\

• &RQVXPHU SROLF\ GRHV DOVR KRZHYHU LQFOXGH DVSHFWV VXFK DVSURGXFW VDIHW\ 6HYHUDO 0HPEHU6WDWHVKDVWKXVWDNHQPHDVXUHVWRVWUHQJWKHQIRRGVDIHW\LQ

• 7KHGLIIXVLRQRI,&7ZLOOIDFLOLWDWHLQIRUPDWLRQWUDQVSDUHQF\DQGFRPSHWLWLYHSUHVVXUHVLQ WKHLQWHUUHODWLRQVKLSEHWZHHQFRQVXPHUVDQGEXVLQHVVHVDQGVXSSRUWWKHGHYHORSPHQW RIHFRPPHUFH3ROLF\PD\QHHGWRDGGUHVVWKHULVNRIDGLJLWDOGLYLGHDVHFRPPHUFH EHFRPHVLQFUHDVLQJO\ZLGHVSUHDG0RVW0HPEHU6WDWHVKDYHSURJUHVVHGE\GHYHORSLQJ HJRYHUQPHQWZKLFKZLOODOVREHQHILWFLWL]HQV

• 7RLQFUHDVHFRQVXPHUFRQILGHQFHLQILQDQFLDOPDUNHWV0HPEHU6WDWHVDUHJHQHUDOO\SURPRWLQJ PHDVXUHVWRLQFUHDVHWUDQVSDUHQF\VXFKDVHJVWULFWHUUHTXLUHPHQWVIRUGLVFORVXUHVRI OLVWHGFRPSDQLHVLPSURYHGSURWHFWLRQRIPLQRULW\VKDUHKROGHUVDQGEHWWHUFRUSRUDWH JRYHUQDQFHSUDFWLFHV

&DSLWDOPDUNHWV

(9)

• 6HYHUDO 0HPEHU 6WDWHV KDYH FKDQJHG ILQDQFLDO UHJXODWLRQ DQG DUH FUHDWLQJ XQLILHG

ILQDQFLDOUHJXODWRUVRUHQKDQFLQJFRRUGLQDWLRQEHWZHHQH[LVWLQJUHJXODWRUV&RRUGLQDWLRQ DPRQJ QDWLRQDO ILQDQFLDO UHJXODWRUV VKRXOG EH IXUWKHU VWUHQJWKHQHG WR PHHW WKH FKDOOHQJHV SRVHG E\ WKH LQWHJUDWLRQ RI WKH (8 ILQDQFLDO V\VWHP DQG 0HPEHU 6WDWHV VKRXOG FDUHIXOO\ DVVHVV WKH FRQVHTXHQFHV RI LQFUHDVLQJ FRQFHQWUDWLRQ LQ ILQDQFLDO VHUYLFHV7KHSURFHVVRIVWRFNH[FKDQJHPHUJHUVDQGLQFUHDVHGFRRSHUDWLRQEHWZHHQVWRFN H[FKDQJHVKDVFRQWLQXHGWKURXJK

9HQWXUHFDSLWDOPDUNHWVKDYHEHHQEXR\DQWLQPRVW0HPEHU6WDWHVGXULQJDQGHDUO\ VXSSRUWHGSDUWO\E\H[SDQGLQJQHZPDUNHWVIRUKLJKWHFKFRPSDQLHV:KLOHWKH VXSSO\RIULVNFDSLWDOLVDGHTXDWHLQPDQ\FRXQWULHVWKHUHFRXOGDSSHDUWREHSUREOHPV ZLWK WKH VXSSO\ RI HDUO\VWDJH ILQDQFLQJ HVSHFLDOO\ IRU 60(V DV ZHOO DV FRPSHWHQW FDSLWDO ZKLFK LQ DGGLWLRQ WR ILQDQFH EULQJV RWKHU FRPSHWHQFLHV WR HQWUHSUHQHXUV (PSKDVLVVKRXOGEHSXWRQHVWDEOLVKLQJWKHULJKWIUDPHZRUNFRQGLWLRQVIRUULVNFDSLWDO HOLPLQDWLQJHJLQDSSURSULDWHEDUULHUVLQH[LVWLQJUHJXODWLRQ

)DYRXUDEOHGHYHORSPHQWVLQFDSLWDOPDUNHWVDUHLQVHYHUDO0HPEHU6WDWHVSDUWO\H[SODLQHGE\ HJUHIRUPVRISXEOLFSHQVLRQV\VWHPVDQGUHGXFHGUHVWULFWLRQVRQWKHFRPSRVLWLRQRI WKHSRUWIROLRVRISHQVLRQIXQGV

/DERXUPDUNHWVDQGWD[EHQHILWV\VWHPV

6NLOOVKRUWDJHVDQGERWWOHQHFNVDUHHPHUJLQJLQVHYHUDO0HPEHU6WDWHVDQGZDJHSUHVVXUHV DSSHDUWREHEXLOGLQJLQVRPH7KLVKLJKOLJKWVWKHLPSRUWDQFHRIFRQWLQXHGHIIRUWVE\ JRYHUQPHQWVVRFLDOSDUWQHUVDQGFRPSDQLHVWRIRUFHIXOO\FRQWLQXHUHIRUPLQJ ODERXU PDUNHWV LQFUHDVH HPSOR\PHQW DQG SDUWLFLSDWLRQ UDWHV DQG XSJUDGH KXPDQ FDSLWDO WKURXJKHGXFDWLRQDQGOLIHORQJOHDUQLQJ

• $PDMRULW\RI0HPEHU6WDWHVKDYHLQLWLDWHGWD[UHIRUPVDLPHGDWUHGXFLQJWKHWD[DWLRQRI HDUQHG LQFRPH LQ SDUWLFXODU IRU ORZ LQFRPHV DQG PDNLQJ WD[ V\VWHPV PRUH HPSOR\PHQWIULHQGO\7KLVLVZHOFRPHGIURPDVWUXFWXUDOSRLQWRIYLHZEXWQHHGVWREH DVVHVVHG DQG IROORZHG XS E\ FDUHIXO FRQVLGHUDWLRQ RI LQIODWLRQDU\ SUHVVXUHV DQG WKH ORQJWHUPVXVWDLQDELOLW\ RISXEOLF ILQDQFHV 5HGXFWLRQV LQ LQFRPH WD[ UDWHV DUH SDUWO\ ILQDQFHGWKURXJKLQFUHDVHVLQLQGLUHFWWD[DWLRQDQGE\EURDGHQLQJWD[EDVHV

• 3URJUHVV KDV EHHQ PXFK OHVV SURQRXQFHG LQ UHIRUPV RI XQHPSOR\PHQW DQG RWKHU

EHQHILWV V\VWHPV ODERXU PDUNHW UHJXODWLRQ DQG LQVWLWXWLRQV DQG VRPH PHDVXUHV ZRUN LQ RSSRVLWHGLUHFWLRQV6RPH0HPEHU6WDWHVEHJDQWRWDFNOHWKHXQHPSOR\PHQWWUDSLVVXH E\DGMXVWLQJVRPHPHDQVWHVWHGEHQHILWVWKDWZHUHSUHYLRXVO\H[FOXVLYHO\JUDQWHGWRWKH XQHPSOR\HG/DERXUPDUNHWIOH[LELOLW\KDVDOVRLQFUHDVHGLQVRPH0HPEHU6WDWHVGXH WRVWURQJGHYHORSPHQWVLQWKHQXPEHURIDW\SLFDOMREFRQWUDFWVSRVVLEO\ZLWKWKHVLGH HIIHFWRIVORZLQJGRZQVRPHZKDWWKHGHFOLQHLQODERXUPDUNHWVHJPHQWDWLRQ

• $VVHVVPHQWRIWKHHIIHFWLYHLPSDFWRIWD[EHQHILWUHIRUPVLVWRVRPHH[WHQWKDPSHUHG E\ODFNRIWLPHO\DQGV\VWHPDWLFLQIRUPDWLRQFRYHULQJHJHIIHFWLYHPDUJLQDODQGDYHUDJHWD[ UDWHVDQGQHWUHSODFHPHQWUDWHVIRUDOOSRSXODWLRQVHJPHQWV7KH&RPPLVVLRQDQGWKH (3&VKRXOGFRQWLQXHWKHLUZRUNRQGDWDDYDLODELOLW\DQGH[FKDQJHRIJRRGSUDFWLFHV

(10)

UDWHV DPRQJ IHPDOHV \RXWK ROGHU ZRUNHUV DQG HWKQLF PLQRULWLHV H[LVW LQ PRVW FRXQWULHV $ ZLGH UDQJH RI PHDVXUHV LV UHTXLUHG WR PDNH HPSOR\PHQW PRUH HYHQO\ GLVWULEXWHG LQFOXGLQJ HQVXULQJ VXIILFLHQW IOH[LELOLW\ LQ ZDJH IRUPDWLRQ VWUHQJWKHQHG UHJLRQDO GHYHORSPHQW SROLFLHV DFFHVV WR FKLOGFDUH IDFLOLWLHV HGXFDWLRQ DQG OLIHORQJ OHDUQLQJDVZHOODVDFWLYHDJHLQJSROLFLHV

• :RUNRQLPSURYLQJDFWLYHODERXUPDUNHWSROLFLHVKDVFRQWLQXHGEXWPXFKUHPDLQVWREH GRQHWRPDNHWKHPPRUHHIILFLHQWDQGZHOOIRFXVHG

• 6RPH0HPEHU6WDWHVKDYHLQUHFHQW\HDUVPDGHVXEVWDQWLDOSURJUHVVLQUHIRUPLQJSHQVLRQ V\VWHPV DQG D IHZ IROORZHG LQ +RZHYHU WR PHHW WKH FKDOOHQJH RI DJHLQJ SRSXODWLRQV PRVW 0HPEHU 6WDWHV VKRXOG FRQWLQXH HIIRUWV WR HVWDEOLVK D FRKHUHQW VWUDWHJ\ LQFOXGLQJ VXVWDLQDEOH ILVFDO FRQVROLGDWLRQ LQFUHDVHG SDUWLFLSDWLRQ RI HOGHUO\ ZRUNHUV DQG D UHYLHZ RI LQVWLWXWLRQDO IHDWXUHV RI SHQVLRQ V\VWHPV 7KH (3& LV SUHVHQWO\ZRUNLQJRQWKLVVXEMHFW

3ROLFLHVWRSURPRWHWKHWUDQVLWLRQWRWKHNQRZOHGJHEDVHGVRFLHW\

• 7KH /LVERQ &RXQFLO HVWDEOLVKHG D VHW RI WDUJHWV IRU WKH (XURSHDQ WUDQVLWLRQ WR WKH NQRZOHGJHEDVHGVRFLHW\7KHH(XURSHDFWLRQSODQKDVEHHQIROORZHGE\VLPLODUQDWLRQDO SODQVLQPRVW0HPEHU6WDWHV

•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

• 7KHGLIIXVLRQ RI ,&7 YDULHV FRQVLGHUDEO\ DPRQJ 0HPEHU 6WDWHV DOWKRXJK JURZWK KDV EHHQLPSUHVVLYHLQDOO0HPEHU6WDWHVLQ<HWHIIRUWVDUHUHTXLUHGWRHQVXUHWKDW EDUULHUV DUH UHPRYHG HJ E\ ORZHULQJ WKH FRVW RI LQWHUQHW DFFHVV WKURXJK LQFUHDVHG FRPSHWLWLRQLQWHOHFRPPXQLFDWLRQV

• 2QHLPSRUWDQWWDVNRIJRYHUQPHQWVLVWRDYRLGVRFLDOH[FOXVLRQLQWKHNQRZOHGJHEDVHG VRFLHW\DQGHQVXULQJDFFHVVWR,&7E\VWXGHQWVDWDOOOHYHOVLVFHQWUDOWRWKHSROLFLHVRIDOO 0HPEHU6WDWHVDOWKRXJKWKHWDUJHWHGWLPHWDEOHFRXOGEHPRUHDPELWLRXVLQVRPH

• $QRWKHULPSRUWDQWDUHDLVWRIDFLOLWDWHH[WHQVLYHXVHRI,&70DQ\0HPEHU6WDWHVDUH WKXVLQWKHSURFHVVRIHVWDEOLVKLQJUHJXODWLRQIRUHFRPPHUFHDQGVHFXULQJWKHOHJDOEDVLVIRU XVHRIHOHFWURQLFVLJQDWXUH

• $OOHYLDWLQJWKHODFNRISHUVRQQHOZLWKUHOHYDQW,&7VNLOOVLVDPDMRUFKDOOHQJHIRU0HPEHU 6WDWHV LQ WKHVKRUWHUWHUP ZKLOH LQWKHORQJHUWHUP DJHQHUDOXSJUDGLQJ RI VNLOOV ZLOO EH FUXFLDOIRUDFKLHYLQJWKHIXOOEHQHILWVRI,&7DQGSUHYHQWLQJVRFLDOH[FOXVLRQ

(11)

&KDOOHQJHVIRUVWUXFWXUDOUHIRUP

5HFHQWGHYHORSPHQWVDQGFKDOOHQJHVLQWKHQHDUIXWXUH

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

90 91 92 93 94 95 96 97 98 99 00 7 8 9 10 11 12

Participation rate Unemployment (r.axis)

Per cent Per cent

0 1 2 3 4 5 6 7 8

90 91 92 93 94 95 96 97 98 99 00 0 1 2 3 4 5 6 7 8

Wage inflation HICP ex HICP

Per cent Per cent

1RWH +,&3H[LV+,&3H[FOHQHUJ\DQGXQSURFHVVHGIRRG 6RXUFH &RPPLVVLRQ6HUYLFHVDQG2(&'(FRQRPLF2XWORRN1R

7KHUDWHRIODERXUSURGXFWLYLW\JURZWKKDVEHHQOHVVHQFRXUDJLQJFRQVLGHULQJWKHVHFRQG KDOIRIWKHVDVDZKROHFIWDEOHHYHQLIWKLVXQGRXEWHGO\WRVRPHH[WHQWUHIOHFWVD ODUJHUWDNHXSRIMREVE\ORZVNLOOHGZRUNHUVZLWKEHORZDYHUDJHSURGXFWLYLW\ 7DEOH*URZWKSHUIRUPDQFHLQUHFHQW\HDUV(8 3URGXFWLYLW\ (PSOR\PHQW *'3 *'3SHUSHUVRQHPSOR\HG7RWDOHFRQRP\ 6RXUFH &RPPLVVLRQ6HUYLFHV 7KHIDFWRUVEHKLQGWKHLPSURYHPHQWVLQJURZWKDQGHPSOR\PHQWDUHLQSDUWLFXODU

• 7KHGHFLVLYHILVFDOFRQVROLGDWLRQHIIRUWVZKLFKLQ PRVW FRXQWULHVZHUH UHLQIRUFHG E\ WKHSUHSDUDWLRQIRUWKHHXURDQGWKH6WDELOLW\DQG*URZWK3DFW 7KLV FRQWULEXWHG WR ORZLQWHUHVWUDWHVORZHULQWHUHVWEXUGHQVDQGPRUHVXVWDLQDEOHEXGJHWSRVLWLRQV

• :DJH GHYHORSPHQWV FRQVLVWHQW ZLWK SURGXFWLYLW\ JURZWK DQG MRE FUHDWLRQ ZKLFK FRQWULEXWHVWRDEDODQFHGPDFURHFRQRPLFSROLF\PL[EDFNHGE\WKH&RORJQHSURFHVV

(12)

SURYLVLRQ RI VWDEOH LQIODWLRQDU\ H[SHFWDWLRQV LQ WKH HQWLUH HXUR DUHD E\ WKH (&%·V PRQHWDU\SROLF\

• 7KH FRQWLQXLQJ LPSOHPHQWDWLRQ RI VWUXFWXUDO UHIRUPV LQ SURGXFW FDSLWDO DQG ODERXU PDUNHWVEDFNHGE\WKH/X[HPERXUJDQG&DUGLIISURFHVVHV

)RU WKH 8QLRQ DV D ZKROH WKH SUHVHQW PDFURHFRQRPLF VLWXDWLRQ LV IDLUO\ ZHOO EDODQFHG DOORZLQJHFRQRPLFDFWLYLW\WRJURZLQOLQHZLWKSRWHQWLDOJURZWK7KHSURVSHFWRI DOHVV VXSSRUWLYH LQWHUQDWLRQDO GHPDQG IRU H[SRUWV VKRXOG EH PDQDJHDEOH FRQVLGHULQJ WKH 8QLRQ·VSULPDU\UHOLDQFHRQGRPHVWLFGHPDQG ZKHUHDVWKHSRWHQWLDOO\QHJDWLYHILQDQFLDO PDUNHWLPSOLFDWLRQVDUHDFRQFHUQ

7KHPDMRUFKDOOHQJHVLQWKHQHDUIXWXUHDUHWR

• 0DLQWDLQPDFURHFRQRPLFSROLFLHVLQIDYRXURISULFHVWDELOLW\JURZWKDQGHPSOR\PHQW

• 6KLIW DQG UHLQIRUFH WKH IRFXV LQ ODERXU PDUNHW SROLFLHV IURP GHPDQG WR VXSSRUWLYH VXSSO\PHDVXUHV

• $GGUHVVWKHGLIIHUHQWF\FOLFDOSRVLWLRQVRIFRXQWULHVZLWKLQWKHHXURDUHDUHO\LQJQRW RQO\RQPDUNHWEDVHGDGMXVWPHQWVRIDJJUHJDWHSULFHDQGZDJHPRYHPHQWVEXWDOVRE\ GHVLJQLQJDSSURSULDWHILVFDODQGVWUXFWXUDOSROLFLHV

7KHUH LV QRW D VWURQJ UHODWLRQVKLS EHWZHHQ WKH UDWH RI XQHPSOR\PHQW DQG WKH UDWH RI LQIODWLRQ DFURVV 0HPEHU 6WDWHV FI ILJXUH 7KLV VXJJHVWV WKDW GLIIHUHQFHV LQ XQHPSOR\PHQWUDWHVDUHH[SODLQHGPRVWO\E\GLIIHUHQFHVLQODERXUPDUNHWVWUXFWXUHV

)LJXUHD8QHPSOR\PHQWUDWHV )LJXUHE,QIODWLRQUDWHV

0 3 6 9 12 15

E EL I FIN F B EU D S UK DK IRL P A NL L 0 3 6 9 12 15 Per Cent Per Cent

0 1 2 3 4 5 6

E EL I FIN F B EU D S UK DK IRL P A NL L 0 1 2 3 4 5 6 Per Cent Per Cent

(VWLPDWHGYDOXHV

6RXUFH (XURVWDW

0HDVXUHV WR VSHHG XS VWUXFWXUDO UHIRUP LQ SURGXFW DQG FDSLWDO PDUNHWV HVSHFLDOO\ ZLWK UHVSHFWWRFUHDWLQJPRUHLQQRYDWLYHDQGFRPSHWLWLYHPDUNHWVLQSUREOHPDUHDVZRXOGLQ DGGLWLRQWRWKHLUEHQHILFLDOORQJWHUPHIIHFWVDOVRLPSURYHVKRUWWHUPGHYHORSPHQWV

,QVXPPDU\WKHSUHVHQWIDYRXUDEOHPDFURHFRQRPLFFRQGLWLRQVRIIHUERWKDQHHGDQGDQ RSSRUWXQLW\ WR DFFHOHUDWH WKH SURFHVV RI VWUXFWXUDO UHIRUPV IRVWHULQJ SRVLWLYH LQWHUDFWLRQ HIIHFWVEHWZHHQPDFURHFRQRPLFDQGVWUXFWXUDOSROLFLHV

6WUXFWXUDOFKDOOHQJHVLQWKHPHGLXPDQGORQJWHUP

(13)

VXVWDLQDEOHHFRQRPLFJURZWKZLWKPRUHDQGEHWWHUMREVDQGJUHDWHUVRFLDOFRKHVLRQ7KLV LQFOXGHVUDLVLQJWKHRYHUDOOHPSOR\PHQWUDWHIURPDQDYHUDJHRISHUFHQWWRGD\WRSHU FHQWE\DQGUDLVLQJWKHIHPDOHHPSOR\PHQWUDWHIURPSHUFHQWWRGD\WRPRUHWKDQ SHUFHQWE\

'HVSLWH WKH HQFRXUDJLQJ JURZWK DQG HPSOR\PHQW GHYHORSPHQWV LQ UHFHQW \HDUV VHYHUDO PHGLXP DQG ORQJWHUP PDMRU VWUXFWXUDO FKDOOHQJHV QHHG WR EH DGGUHVVHG WR PHHW WKH /LVERQREMHFWLYHVLQSDUWLFXODU

• +LJK OHYHOV RI VWUXFWXUDO XQHPSOR\PHQW DQG LQDFWLYLW\ UDWHV LQ PRVW FRXQWULHV DQG ODERXUPDUNHWVHJPHQWDWLRQZLWKUHVSHFWWRUHJLRQVJHQGHUDJHVNLOOOHYHOVDQGHWKQLF PLQRULWLHVDVUHIOHFWHGE\GLVSURSRUWLRQDWHO\ODUJHGLIIHUHQFHVLQXQHPSOR\PHQWUDWHV

• ,QVXIILFLHQWSUHSDUDWLRQIRUWKHORQJWHUPSXEOLFILQDQFHFKDOOHQJHRIDJHLQJ

• 2QO\ PRGHUDWH LQFUHDVHV LQ RYHUDOO SURGXFWLYLW\ DQG WKH VSHHG RI WUDQVLWLRQ WR WKH NQRZOHGJHEDVHGHFRQRP\

:KHUHDVXQHPSOR\PHQWUDWHVKDYHEHFRPHORZLQRQHKDOIRIWKHPRVWO\VPDOOHU0HPEHU 6WDWHVWKHDYHUDJHXQHPSOR\PHQWUDWHRIWKH8QLRQLVVWLOOKLJK(PSOR\PHQWDQGODERXU IRUFHSDUWLFLSDWLRQVKRXOGEHLQFUHDVHGLQDOOFRXQWULHV

7KHQHHGWRLQFUHDVHSDUWLFLSDWLRQUDWHVLVUHLQIRUFHGE\WKHGHPRJUDSKLFFKDQJHZKLFKLQ PRVW FRXQWULHV ZLOO OHDG WR D VKLIW IURP JURZLQJ WR VWDJQDWLQJ ZRUNLQJDJH SRSXODWLRQV DOUHDG\LQWKHLPPHGLDWHIXWXUH2QHHQFRXUDJLQJREVHUYDWLRQLVWKDWIHPDOHSDUWLFLSDWLRQ UDWHVLQVRPHFRXQWULHVHJ,UHODQGDQG6SDLQKDYHVWDUWHGWRLQFUHDVHTXLWHVWURQJO\

$EURDGUDQJHRIVWURQJPHDVXUHVLVQHHGHGLIWKH/LVERQHPSOR\PHQWWDUJHWFIILJXUHD LVWREHPHW

)LJXUHD(PSOR\PHQWUDWHV )LJXUHE*'3SHUKRXU86$

0 20 40 60 80

DK NL S UK A P FIN D IRL EU F L B EL E I 0 20 40 60 80 Per Cent Per Cent

0 25 50 75 100 125 150

DK NL S UK A P FIN D IRL EU F L B EL E I 0 25 50 75 100 125 150 US=100 US=100

(VWLPDWHGYDOXHV

6RXUFH (XURVWDWDQG2(&'

(14)

KDVEHHQLQVWUXPHQWDOLQERRVWLQJHPSOR\PHQWJURZWKLQDQXPEHURIFRXQWULHVHYHQLI WKLVGRHVQRWDGGUHVVWKHSUREOHPDWLWVURRWDQGPD\LQVRPHLQVWDQFHVFDXVHQHZVRUWVRI ODERXUPDUNHWVHJPHQWDWLRQ

$GGUHVVLQJWKHSDUWLFXODUO\ORZSDUWLFLSDWLRQUDWHVDPRQJZRUNHUVDJHGRUPRUHVHUYHV WKH WULSOH SXUSRVHV RI FRQWULEXWLQJ WR KLJKHU OHYHOV RI HPSOR\PHQW DQG SURGXFWLRQ DOOHYLDWLQJWKHSXEOLFH[SHQGLWXUHLQFUHDVHVRIDJHLQJDQGLQPDQ\FDVHVSURYLGLQJVRFLDO EHQHILWVIRU WKRVHFRQWLQXLQJ RUWDNLQJ XS HPSOR\PHQW 7KLV LV D PDMRU FKDOOHQJH WR EH DGGUHVVHGYLDEHQHILWUHIRUPVDVZHOODVYLDFUHDWLQJPRUHLQFOXVLYHDQGDWWUDFWLYHODERXU PDUNHW FRQGLWLRQV IRU WKHVH ZRUNHUV 6XSSRUW DQG DVVLVWDQFH IURP WKH VRFLDO SDUWQHUV LV KLJKO\ZDUUDQWHGLQWKHVHDQGRWKHUDUHDV

&RQWLQXLQJWKHSDWKRISXEOLFGHEWUHGXFWLRQVDQGFRQVROLGDWLQJSXEOLFSHQVLRQV\VWHPVLV DQRWKHU NH\ SUHSDUDWLRQ IRU DJHLQJ SRSXODWLRQV 7KLV QHHG OLPLWV WKH H[WHQW WR ZKLFK VWUXFWXUDOODERXUPDUNHWSUREOHPVFDQEHLPSURYHGE\IXUWKHUWD[UHGXFWLRQVDORQH

$VZRUNLQJDJHSRSXODWLRQVDUHQR ORQJHU JURZLQJ DQGDUH HYHQ GHFOLQLQJ RYHU WLPH LQ VRPH FRXQWULHV D FRQWLQXDWLRQ RI SUHVHQW JURZWK WUHQGV UHTXLUHV VWURQJHU SURGXFWLYLW\ JURZWK0HDVXUHVWRERRVWSURGXFWLYLW\JURZWKLQFOXGH

• 6WURQJHULQYHVWPHQWLQKXPDQDQGSK\VLFDOFDSLWDO

• 6SHHGLQJXSPHDVXUHVWRVWUHQJWKHQFRPSHWLWLRQDQGWKHIXQFWLRQLQJRIPDUNHWV

• )DFLOLWDWLQJWKHWUDQVLWLRQWRWKHNQRZOHGJHEDVHGHFRQRP\LQFOXGLQJ,&7LQYHVWPHQWV DVZHOODVVWURQJHU5 'DQGLQQRYDWLRQ

7KHUHDOVRH[LVWVDSRWHQWLDOIRUDFDWFKXSLQSURGXFWLYLW\FRQVLGHULQJWKHORZHUSURGXFWLYH OHYHOV LQ D QXPEHU RI FRXQWULHV DQG UHJLRQV FRPSDUHG WR WKH PRVW DGYDQFHG 0HPEHU 6WDWHVFIILJXUHE0RVW0HPEHU6WDWHVDOVRKDYHDFDWFKLQJXSSRWHQWLDOFRPSDUHGWRWKH 86$LQWHUPVRI*'3SHUKRXUZRUNHG

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

$VWKHSXEOLFVHFWRUFRQVWLWXWHVDODUJHVKDUHRIWKHHFRQRP\LQ0HPEHU6WDWHVVSHFLILF DWWHQWLRQLVQHHGHGWRHQKDQFHWKHTXDOLW\DQGHIILFLHQF\RIWKHVHUYLFHVSURYLGHGE\WKLV VHFWRU7KHTXDOLW\RIWKHSXEOLFVHFWRUDIIHFWVERWKIUDPHZRUNFRQGLWLRQVIRUEXVLQHVVWKH ZHOOEHLQJRIWKHXVHUVRISXEOLFVHUYLFHVDQGLWVDELOLW\WRKHOSDQGDVVLVWYXOQHUDEOHJURXSV DWWKHODERXUPDUNHWRULQVRFLDOV\VWHPV

(15)

7KHFRPELQHGDJHQGDRIIXUWKHUVWUXFWXUDOUHIRUPLVQRWDQHQGLQLWVHOIEXWDPHDQVRI DFKLHYLQJWKHKLJKDPELWLRQVRIWKH8QLRQLQWHUPVRIOLYLQJVWDQGDUGVHPSOR\PHQWDQG VRFLDOLQFOXVLRQ

(FRQRPLFUHIRUPVKDYHVRIDUDQGLQDGGLWLRQWRSRVLWLYHRYHUDOOFRQWULEXWLRQVWRJURZWK HPSOR\PHQWDQGWKHVXVWDLQDELOLW\RIWKHZHOIDUHVWDWHVDOVRSURYLGHGVSHFLILFEHQHILWVIRU FLWL]HQVDQGFRQVXPHUVZLWKUHVSHFWDPRQJRWKHUWKLQJVWR

• /RZHUSULFHVIRUDQXPEHURIJRRGVDQGVHUYLFHV

• $ZLGHUUDQJHRISURGXFWVDQGKLJKHUTXDOLW\RIJRRGVDQGVHUYLFHV

• ,QFUHDVHGRSSRUWXQLWLHVRIHPSOR\PHQWIRUFLWL]HQVLQYXOQHUDEOHVLWXDWLRQV

0RUHRYHU WKHUH DUH QR LQGLFDWLRQV WKDW UHIRUPV DLPLQJ DW ORZHU SULFHV DQG KLJKHU HIILFLHQF\KDYHKDGDQHJDWLYHLPSDFWRQWKHSURYLVLRQRIYLWDOSXEOLFDQGVRFLDOJRRGVVXFK DVXQLYHUVDOVHUYLFHREOLJDWLRQVDQGFRQVXPHUVDIHW\

6WUXFWXUDOSROLF\LPSOLFDWLRQVRIWKHNQRZOHGJHEDVHGVRFLHW\

7KHJURZLQJSHQHWUDWLRQDQGXVHRI,&7LVWRJHWKHUZLWKJOREDOLVDWLRQFKDQJLQJWKHZD\ LQ ZKLFK LQ SDUWLFXODU SULYDWH FRPSDQLHV SURGXFH EHKDYH RUJDQLVH DQG LQWHUDFW 7KH ZLGHVSUHDGXVHRI,&7FUHDWHVDSDUWLFXODUHFRQRPLFHQYLURQPHQW FKDUDFWHULVHG E\ HJ YHU\ORZFRPPXQLFDWLRQFRVWVDQGDOPRVWXQOLPLWHGDFFHVVWRLQIRUPDWLRQ7KHVHFKDQJHV SRVH RSSRUWXQLWLHV DQG FKDOOHQJHV IRU HFRQRPLF DQG VWUXFWXUDO SROLFLHV DV ZHOO DV IRU LQGLYLGXDOEXVLQHVVHVZRUNHUVFLWL]HQVDQGFRQVXPHUV

7KHNQRZOHGJHEDVHGVRFLHW\ZKLFKLVIRXQGHGRQWKHSURGXFWLRQGLVWULEXWLRQDQGXVHRI NQRZOHGJHLQYROYHVWZRPDMRUSROLF\DUHDV

• &UHDWLQJ WKH IUDPHZRUN FRQGLWLRQV QHFHVVDU\ IRU ZLGHVSUHDG XVH RI ,&7 VXFK DV LQYHVWLQJLQ,&7HTXLSPHQWDQGHQVXULQJHIIHFWLYHXVHDWORZDFFHVVSULFHV

• $GMXVWLQJHOHPHQWVZLWKLQWKHEURDGUDQJHRIRYHUDOOVWUXFWXUDOSROLFLHVWRWKHH[WHQW WKDWWKHHFRQRPLFHQYLURQPHQWFKDUDFWHULVLQJWKHNQRZOHGJHEDVHGVRFLHW\UHTXLUHVD VKLIWLQIRFXVDQGVFRSH

:LWKUHVSHFWWRWKHPDFURHFRQRPLFHIIHFWVRI,&7DQGWKHNQRZOHGJHEDVHGHFRQRP\D QXPEHURIK\SRWKHVHVKDYHEHHQPDGHLQWKHSXEOLFDQGSURIHVVLRQDOGHEDWHVXQGHUWKH KHDGLQJRI´1HZ(FRQRP\µ)DVWHUSURGXFWLYLW\JURZWKDWOHDVWLQDWUDQVLWLRQSHULRGDQG SHUKDSV D FRQWULEXWLRQ WR ORZHU LQIODWLRQDU\ SUHVVXUHV DQG WKXV ORZHU VWUXFWXUDO XQHPSOR\PHQW GXH WR KLJKHU FRPSHWLWLYH SUHVVXUHV DUH WKH PRVW YDOLG K\SRWKHVHV %\ FRQWUDVWRWKHUSRSXODUK\SRWKHVHVVXFKDVWKHGLVDSSHDUDQFHRIFDSDFLW\FRQVWUDLQWVDQG WKHULVNRILQIODWLRQDU\SUHVVXUHVDQHZHUDZLWKRXWEXVLQHVVF\FOHVDQGWKHSURVSHFWVRID ORQJERRPKDYHQRDQDO\WLFDOIRXQGDWLRQRUIDFWXDOHYLGHQFHWRVXSSRUWWKHP

(16)

(YHQ LI WKH LPSDFW RI ,&7 DQG WKH NQRZOHGJHEDVHG VRFLHW\ DV D PDFURHFRQRPLF SKHQRPHQRQ PD\ EH WUDQVLWRU\ KRZHYHU WKHUH ZLOO EH SURQRXQFHG HIIHFWV ZLWKLQ WKH EXVLQHVVVHFWRUDQGFRQVXPHUVZLOOEHQHILWIURPPDQ\QHZRSSRUWXQLWLHV

:KDWGLIIHUHQWLDWHV,&7IURPRWKHUWHFKQRORJLHVLVQRWUHODWHGWRWKHSURGXFWLRQRI,&7 EXWWKHH[WHQWWRZKLFKWKLVWHFKQRORJ\LVRUFDQEHXVHGLQSURGXFWLRQSURFHVVHVDFURVVD YHU\ZLGHUDQJHRIVHFWRUVDQGDOVRLQSULYDWHKRXVHKROGV

<HW JRYHUQPHQWV DUH QRW LQ D SRVLWLRQ WR FRQFOXGH WKDW WKH XVH RI ,&7 LQ LQGLYLGXDO FRPSDQLHV DQG KRXVHKROGV LV VXSHULRU WR RWKHU SURGXFWLRQ IDFWRUV DQG FRQVXPSWLRQ DW JLYHQPDUNHWSULFHV5HVWUDLQWVKRXOGWKHUHIRUHEHVKRZQZLWKUHVSHFWWR LQWHUIHUHQFH LQ WKHVHPDUNHWGHFLVLRQV2QWKHRWKHUKDQGDFFRXQWPXVWDOVREHWDNHQRIWKHIDFWWKDWWKH XVHRIVRPH,&7SURGXFWVLQSDUWLFXODUWKH,QWHUQHWFUHDWHVLPSRUWDQWQHWZRUNHIIHFWVDV WKHXVHRIFRPPXQLFDWLRQHTXLSPHQWLQFUHDVHVLIWKHWRWDOQXPEHURIXVHUVLQFUHDVHV

7KHXVHRI,&7LVJURZLQJVWURQJO\LQ0HPEHU6WDWHVEXWIURPYHU\GLIIHUHQWOHYHOVFIWDEOH )URPWRWKHVKDUHRIFLWL]HQVLQWKH(8ZLWK,QWHUQHWDFFHVVDWKRPHPRUH WKDQGRXEOHGEXWRQDYHUDJH,QWHUQHWSHQHWUDWLRQLVVWLOOORZHUWKDQLQWKH86$,Q (8H[SHQGLWXUHRQ,&7DVDVKDUHRI*'3VXUSDVVHGWKDWRIWKH86$<HWWKHUHDUHODUJH GLIIHUHQFHVDPRQJ0HPEHU6WDWHVDQGVRPHKDYHDVLJQLILFDQWEDFNORJFRPSDUHGWRWKH PRVW DGYDQFHG 0HPEHU 6WDWHV VXFK DV 6ZHGHQ WKH 1HWKHUODQGV DQG 3RUWXJDO ZKHQ PHDVXUHGDFFRUGLQJWRWKHVKDUHRI,&7H[SHQGLWXUHVLQ*'30HDVXUHVWDNHQWRVWLPXODWH WKHIUDPHZRUNFRQGLWLRQVQHHGHGWRLQFUHDVHWKHXVHRI,&7DUHGHVFULEHGLQVHFWLRQ DQGDQQH[,,,

7DEOH,QGLFDWRUVRIWKHWUDQVLWLRQWRWKHNQRZOHGJHEDVHGVRFLHW\

,QWHUQHWSHQHWUDWLRQ

SHUFHQWRIWRWDOSRS ,&7H[SHQGLWXUHSHUFHQWRI*'3 5 'H[SHQGLWXUH SHUFHQWRI*'3

1HWKHUODQGV

6ZHGHQ

'HQPDUN

)LQODQG

8QLWHG.LQJGRP

$XVWULD

/X[HPERXUJ

,UHODQG

%HOJLXP

(8

*HUPDQ\

,WDO\

)UDQFH

3RUWXJDO

6SDLQ

*UHHFH

8QLWHG6WDWHV

6KDUHRIFLWL]HQVZKRKDYH,QWHUQHWDFFHVVDWKRPH

2EVHUYDWLRQVIRUIRU%HOJLXP*UHHFHDQG,UHODQGIRU)UDQFH1HWKHUODQGVDQGWKH8.

IRU'HQPDUN*HUPDQ\3RUWXJDO6SDLQ6ZHGHQ,WDO\$XVWULD)LQODQG(8DQG86$ 6RXUFH '*,1)62(,72(XURVWDWDQG2(&'

$VVHVVLQJ WKH EURDGHU DVSHFWV RI WKH NQRZOHGJHEDVHG VRFLHW\ WKH QHZ FKDOOHQJHV IRU VWUXFWXUDOSROLFLHVPD\EHJURXSHGXQGHUWZRKHDGLQJV

• 7KHQHHGWRHQVXUHFRPSHWLWLYHSUHVVXUHVDQGDGMXVWUHJXODWLRQ

(17)

,&7 DQG WKH NQRZOHGJHEDVHG HFRQRP\ PD\ JLYH ULVH WR D QXPEHU RI TXLWH GLIIHUHQW GHYHORSPHQWVDQGFKDOOHQJHVLQGLIIHUHQWPDUNHWV

,QPDUNHWVRIVWDQGDUGSURGXFWVEHWWHULQIRUPDWLRQDQGLQFUHDVHGJOREDOLVDWLRQVKRXOGLQFUHDVH FRPSHWLWLRQDQGIDFLOLWDWHORZHUSULFHLQFUHDVHV,QWKHVHPDUNHWVKRZHYHUFRPSDQLHVPD\ VHHNPHUJHUVDQGDFTXLVLWLRQVLQRUGHUWRPDLQWDLQPDUNHWSRZHU7KLVFKDOOHQJHVKRXOGEH DGGUHVVHGE\FRPSHWLWLRQDXWKRULWLHVLIWKHIXOOEHQHILWVDUHWREHUHDSHG

0RUH VSHFLDOLVHG PDUNHWV DQG PDUNHWV IRU QHZ SURGXFWV DUH FKDUDFWHULVHG E\ VKRUWHU DQG IDVWHU SURGXFWF\FOHVWRJHWKHUZLWKTXLFNDQGHDV\DFFHVVWRODUJHPDUNHWV,QWKHVHPDUNHWVWKHUH DUHVWURQJLQFHQWLYHVWRLQQRYDWHDQGH[SORLWWHPSRUDU\PRQRSRO\VLWXDWLRQVDVWKHLQLWLDO PDUNHW SRZHU IRU D JLYHQ SURGXFW PD\ HURGH IDVW DIWHUZDUGV )DYRXUDEOH FRQGLWLRQV LQ WHUPV RI 5 ' LQQRYDWLRQ KXPDQ FDSLWDO EXVLQHVVXQLYHUVLW\ LQWHUDFWLRQ DQG DFFHVV WR YHQWXUHFDSLWDOPD\XQGHUWKHVHFLUFXPVWDQFHVFUHDWHDKLJKYDOXHDGGHG:KDWPDWWHUVIRU WKH ZKROH HFRQRP\ LQ WKHVH UHVSHFWV LV SDUWLFXODUO\ D ODUJH DQG HIIHFWLYH VXSSO\ RI WKH SURGXFWLRQ IDFWRUV QHHGHG IRU VXFFHVV LQ LQQRYDWLYH PDUNHWV VXFK DV KXPDQ FDSLWDO 5HDOORFDWLRQVRIVXFKVFDUFHUHVRXUFHVDORQHPD\QRWLPSURYHRYHUDOOSHUIRUPDQFH2SHQ PDUNHWVDQGLQWHOOHFWXDOSURSHUW\ULJKWVDUHDOVRLPSRUWDQWKHUH

&RQVLGHULQJWKHVWURQJSRVLWLRQRISULYDWHFRPSDQLHVLQWHUPVRISURILWDELOLW\DQGFDSLWDO UHWXUQV WKURXJKRXW WKH V WKH FRPSHWLWLYH SUHVVXUHV KDYH QRW GRPLQDWHG WKH RWKHU IDFWRUVDIIHFWLQJSURILWDELOLW\LQWKLVSHULRG

$WKLUGDUHDLVLQQHWZRUNLQGXVWULHVZKHUHQHZWHFKQRORJLHVKDYHPDGHWKHLQWURGXFWLRQRI FRPSHWLWLYHPDUNHWVSRVVLEOHHJE\DOORZLQJDVHSDUDWLRQRIGLVWULEXWLRQDQGSURGXFWLRQ &RPSDQLHV DUH QRZ WDNLQJ DGYDQWDJH RI WKHVH RSSRUWXQLWLHV ,Q WKH FDVH RI WHOHFRPPXQLFDWLRQVHIIHFWLYHDQGFRPSHWLWLYHPDUNHWVWKDWHQVXUHHDV\DFFHVVDQGORZHU SULFHVRI,&7DQGLQWHUQHWXVHDUHFUXFLDOLQRUGHUWRUHDOLVHWKHLPSRUWDQWVSLOORYHUHIIHFWV IURPLQFUHDVHGDQGHIIHFWLYHXVHRI,&7DQGWKHQHZWHFKQRORJLHV

6HUYLFHV SURYLGHG E\ WKH SXEOLF VHFWRU DUH D PDMRU DUHD E\ LWVHOI ZKHUH WKH XVH RI ,&7 PD\ FRQWULEXWHWREHWWHUVHUYLFHVDQGKLJKHUHIILFLHQF\%\GHILQLWLRQWKHVHEHQHILWVFDQQRWEH UHDSHGVLPSO\YLDPDUNHWIRUFHVEXWLQVWHDGUHTXLUHGLUHFWLQYROYHPHQWRIPDQDJHPHQWDQG GHFLVLRQPDNHUV

$PRQJWKHPDMRUFKDOOHQJHVIDFLOLWDWLQJWKHWUDQVLWLRQWRWKHNQRZOHGJHEDVHGVRFLHW\LVWKH GHYHORSPHQW RI EDVLF,&7 VNLOOV PDNLQJ WKH XVH RIWKLV WHFKQRORJ\ DYDLODEOH IRU DOO DQG DYRLGLQJDGLJLWDOGLYLGH7KHIRFXVRQEHWWHUVRFLDOLQFOXVLRQDQGOLIHORQJOHDUQLQJDWWKH /LVERQ&RXQFLOUHPDLQVLQGLVSHQVDEOHLQWKLVUHVSHFW

(18)

3URJUHVVLQVWUXFWXUDOUHIRUP

6WUXFWXUDOUHIRUPLVDQRQJRLQJSURFHVVDQGUHJXODWLRQPXVWUHJXODUO\EHDGMXVWHGWRPDWFK WKH FKDOOHQJHV WKDW SUHYDLO DW DQ\ JLYHQ PRPHQW 0RUHRYHU 0HPEHU 6WDWHV IDFHG YHU\ GLIIHUHQWLQLWLDOFRQGLWLRQVZKHQWKHUHJXODWRU\UHIRUPSURFHVVEHFDPHDQLQWHJUDWHGSDUWRI FRRSHUDWLRQZLWKLQWKH(8DQGOHJDFLHVRIWKHSDVWDUHVWLOOHYLGHQWZKHQFRPSDULQJWKH FXUUHQWVWDWHRIDIIDLUVLQGLIIHUHQWFRXQWULHV

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´VWDWHRIDIIDLUVµDQG FKDQJHVVKRXOGEHNHSWLQPLQGZKHQDVVHVVLQJWKHUHYLHZEHORZ

0DUNHWVIRUJRRGVDQGVHUYLFHV

,QWHUQDOPDUNHWOHJLVODWLRQDQGVWDWHDLG

6WUHQJWKHQLQJRIWKH,QWHUQDO0DUNHW

$OOEXWWKUHH0HPEHU6WDWHVUHGXFHGWKHVKDUHRI,QWHUQDO0DUNHW'LUHFWLYHVWKDWZDVQRW WUDQVSRVHG LQWRQDWLRQDOOHJLVODWLRQEHWZHHQ0D\DQG1RYHPEHUFI WDEOH 5HGXFWLRQV KDYH EHHQ ODUJHVW LQ ,WDO\ $XVWULD /X[HPERXUJ DQG 3RUWXJDO 7KH QRQ WUDQVSRVLWLRQ UDWH ZRUVHQHG LQ *UHHFH ZKLFK ZDV DOUHDG\ WKH 0HPEHU 6WDWH ZKHUH LPSOHPHQWDWLRQRI(8OHJLVODWLRQZDVODFNLQJWKHPRVWDQGLQ*HUPDQ\ZKLFKKDVKDG WDONVZLWKWKH&RPPLVVLRQRQKRZWRLPSURYHWKHVLWXDWLRQ

0DQ\0HPEHU6WDWHVKDYHLQUHFHQW\HDUVLQWURGXFHGVSHFLDOERGLHVDQGSURFHGXUHVWRHQVXUH WKHWUDQVSRVLWLRQRIGLUHFWLYHVLQDIDVWDQGH[SHGLHQWPDQQHU7RZDUGVWKHHQGRI %HOJLXPIROORZHGE\DSSRLQWLQJDFRPPLVVLRQHUDQGDQ DFWLRQ SODQ ZDVDGRSWHG GXULQJ 7KH)UHQFKJRYHUQPHQWUHFHLYHGLQODWHDQDXWKRULVDWLRQIURPSDUOLDPHQWWR VSHHGXSWUDQVSRVLWLRQZKLFKLVH[SHFWHGWRLPSURYHWKHUHODWLYHO\SRRUUHFRUGRI)UDQFH

'HVSLWH WKH RYHUDOO SURJUHVV VWLOO PRUH WKDQ SHU FHQW RI DOO GLUHFWLYHV KDYH QRW \HW EHHQ WUDQVSRVHGLQRQHRUPRUH0HPEHU6WDWHV5HODWLYHWRWKHWRWDOQXPEHURIGLUHFWLYHVWKHQRQ WUDQVSRVLWLRQ UDWH LV ZRUVW LQ DUHDV VXFK DV LQWHOOHFWXDO SURSHUW\ ULJKWV WUDQVSRUW SXEOLF SURFXUHPHQWHQHUJ\DQGHQYLURQPHQW

%HVLGHV WKH FRQWLQXHG WUDQVSRVLWLRQ RI GLUHFWLYHV RWKHU DVSHFWV RI WKH ,QWHUQDO 0DUNHW GHVHUYHDWWHQWLRQ6RPH0HPEHU6WDWHVUHSRUWWKDWFRPSODLQWVFRQFHUQLQJWKHIXQFWLRQLQJ RIWKH(XURSHDQPDUNHWDUHVWLOOEHLQJUDLVHGE\EXVLQHVV2IWHQWKH\DUHUHODWHGWRWKHODFN RI PXWXDO UHFRJQLWLRQ RU VWDQGDUGLVDWLRQ LQ WKH QRQKDUPRQLVHG DUHDV 0HPEHU 6WDWHV VKRXOGWKHUHIRUHEHHQFRXUDJHGWRSXWPRUHHIIRUWVLQWRWKHVWDQGDUGLVDWLRQSURFHVVHVDQG WDNH PHDVXUHV WR HQVXUH FRUUHFW LPSOHPHQWDWLRQ DQG XVH RI WKH PXWXDO UHFRJQLWLRQ

(19)

SULQFLSOH$QXPEHURI0HPEHU6WDWHVDOVRFDOOIRUDFWLRQWRRSHQXSIRUSDUDOOHOLPSRUWV RIWUDGHPDUNSURGXFWVIURPFRXQWULHVRXWVLGHWKH(($

7DEOH,QWHUQDO0DUNHWOHJLVODWLRQSXEOLFSURFXUHPHQWDQGVWDWHDLG

,QWHUQDO0DUNHWGLUHFWLYHV

QRQWUDQVSRVLWLRQUDWHV 3XEOLFSURFXUHPHQW

VKDUHRI*'3 6HFWRUDODQGDGKRFVWDWHDLG VKDUHRI*'3

&KJ &KJ &KJ

3HUFHQW 3FWSRLQWV 3HUFHQW 3FWSRLQWV 3HUFHQW 3FWSRLQWV

$XVWULD

%HOJLXP

'HQPDUN

)LQODQG

)UDQFH

*HUPDQ\

*UHHFH

,UHODQG

,WDO\

/X[HPERXUJ

1HWKHUODQGV

3RUWXJDO

6SDLQ

6ZHGHQ

8.

(8

6KDUHRI,QWHUQDO0DUNHWGLUHFWLYHVQRWWUDQVSRVHGDVRI1RYHPEHUDQGWKHFKDQJHEHWZHHQ 0D\DQG1RYHPEHU

6KDUHRI,QWHUQDO0DUNHWGLUHFWLYHVQRW\HWWUDQVSRVHGDFURVVWKHZKROHRIWKH8QLRQ 9DOXHRISXEOLFSURFXUHPHQWZKLFKLVRSHQO\DGYHUWLVHG

UHSUHVHQWVSURYLVLRQDODYHUDJHVIRUWKHSHULRGZKLOH WKH FKDQJH EHWZHHQ DQG

UHSUHVHQWVFKDQJHVEHWZHHQWKHDYHUDJHDQGWKHDYHUDJHIRU 6RXUFHV6LQJOH0DUNHW6FRUHERDUG1RYHPEHU'*0$5.7DQG&RPPLVVLRQ6HUYLFHV

3XEOLFSURFXUHPHQWDFFRXQWVIRUDODUJHVKDUHRIWRWDOGHPDQGLQDOO0HPEHU6WDWHV,WLV WKHUHIRUHRIXWPRVWLPSRUWDQFHWKDWSXEOLFSURFXUHPHQWSUDFWLFHVFRQWULEXWHWRWKHFUHDWLRQRI FRPSHWLWLYHPDUNHWVQDWLRQDOO\DVZHOODV(8ZLGH$FFRUGLQJWR&RPPLVVLRQHVWLPDWHV WKHYDOXHRISXEOLFSURFXUHPHQWSXEOLVKHGLQWKH2IILFLDO-RXUQDOKDVVLQFHVWDJQDWHG DWDURXQGSHUFHQWRI*'3,QWKHVKDUHUDQJHGIURPSHUFHQWRI*'3IRU *HUPDQ\WRSHUFHQWIRUWKH8.DQGSHUFHQWIRU*UHHFHFIWDEOH

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

(20)

%R[ *RRGSUDFWLFH,PSURYLQJSXEOLFSURFXUHPHQWE\XVLQJWKH,QWHUQHW

7KH´3XEOLFH[SHQGLWXUHRQOLQHµSURMHFWLQ,WDO\LVDJRYHUQPHQWSODQLQWZRVWDJHVLQWURGXFHGZLWKDQDLP WRUDWLRQDOLVHWKHSXEOLFDGPLQLVWUDWLRQH[SHQGLWXUH

7KH ILUVW VWDJH KDV EHHQ UXQQLQJ IRU RQH \HDU DQG LV EDVHG RQ WKUHH SULQFLSDOV SURPRWLRQ RI WKH QHZ HFRQRP\ E\ SXEOLF DGPLQLVWUDWLRQ DXWRQRP\ DQG IXOO UHVSRQVLELOLW\ RI SXEOLF PDQDJHPHQW LQ SXUFKDVLQJ SURFHGXUHV DQG VLPSOLILFDWLRQ RI SURFHGXUHV $ FHQWUDO VHUYLFH XQLW KDV EHHQ VHW XS WR DVVLVW DOO SXEOLF DGPLQLVWUDWLRQLQSXUFKDVLQJJRRGVDQGVHUYLFHV$XFWLRQVDUHSXEOLFO\DQQRXQFHGWRZKLFKDOOVXSSOLHUVRI SXEOLFJRRGVDQGVHUYLFHVFDQSDUWLFLSDWH7KHPRVWIDYRXUDEOHRIIHULVFKRVHQE\WKHFHQWUDOVHUYLFHXQLWDQG WKH FKRVHQ JRRG RU VHUYLFH DQG WKH SULFH LV DQQRXQFHG DW DQ LQWHUQHW ZHEVLWH (YHU\ RIILFH LQ WKH SXEOLF DGPLQLVWUDWLRQFDQRUGHUWKHLUGHVLUHGTXDQWLW\IURPWKHZHEVLWH

7ZRDXFWLRQVKDYHEHHQFDUULHGRXWIROORZLQJWKLVQHZSURFHGXUHRQHIRUIL[HGWHOHSKRQHFDOOVDQGRQHIRU SKRWRFRSLHUPDFKLQHV7KHUHVXOWLQJVDYLQJVIRUWKH,WDOLDQSXEOLFDGPLQLVWUDWLRQKDYHEHHQFRQVLGHUDEOH SHUFHQWORZHUFRVWVLQWKHFDVHRIIL[HGWHOHSKRQHFDOOVDQGSHUFHQWORZHUIRUSKRWRFRSLHUV7KHDYHUDJH HVWLPDWHGVDYLQJVIRUWRWDOVWDWHFRPPRQH[SHQGLWXUHLVSHUFHQW

7KH VHFRQG VWDJH DLPV WR UHGXFH SURFXUHPHQW H[SHQGLWXUH VSHHG XS WKH SURFHVV HQVXUH WUDQVSDUHQF\ LQ WHQGHULQJDQGRSHQXSWKHSXEOLFVXSSO\PDUNHWIRUFRPSHWLWLRQ7KHSXEOLFDWLRQRISXEOLFFDOOVIRUWHQGHUV ZLOOEHSURYLGHGHOHFWURQLFDOO\(FRPPHUFHZLOOEHIXUWKHUSURPRWHGDQGGHYHORSHGDV DQ LQVWUXPHQW IRU SXEOLFSXUFKDVHV RIJRRGVDQGVHUYLFHV7KHSURMHFWZLOOLPSOHPHQWDSHUPDQHQWRQOLQHDXFWLRQLQZKLFK VXSSO\DQGGHPDQGFDQEHPDWFKHGLQUHDOWLPHHQVXULQJWKDWSXEOLFERGLHVDOZD\VJHWWKHEHVWSULFH

2WKHU PHPEHU VWDWHV VXFK DV $XVWULD %HOJLXP 'HQPDUN )LQODQG *HUPDQ\ ,UHODQG WKH 1HWKHUODQGV 6ZHGHQDQGWKH8.KDYHDOVRWDNHQPHDVXUHVLQWKLVDUHD

6WDWHDLG

7KHRYHUDOOOHYHORIVWDWHDLGLQWKH(8LVJUDGXDOO\EHLQJUHGXFHG<HWWKHSDFHLVUHODWLYHO\ VORZDQGLQVRPH0HPEHU6WDWHVVWDWHDLGKDVLQFUHDVHGLQUHFHQW\HDUVDVDVKDUHRI*'3

2QHUHDVRQIRUWKHVORZUHGXFWLRQLVWKDWPRUHDLGLVJHQHUDOO\GHYRWHGWRKRUL]RQWDOREMHFWLYHVVXFK DV HQHUJ\ VDYLQJV D FOHDQHU HQYLURQPHQW UHVHDUFK DQG GHYHORSPHQW IRVWHULQJ HQWUHSUH QHXUVKLS DQG 60(V WKURXJK HJ ULVN FDSLWDO SURJUDPPHV %\ FRQWUDVW WKH SDUWLFXODUO\ GLVWRUWLRQDU\VHFWRUDODQGDGKRFDLGLVEHLQJUHGXFHGDWDUHODWLYHO\IDVWSDFHFIWDEOH 7KHUHDUHODUJHYDULDWLRQVEHWZHHQ0HPEHU6WDWHVDVWRWKHH[WHQWRIVHFWRUDODLGUDQJLQJ LQIURPOHVVWKDQSHUFHQWRI*'3LQ)LQODQGWRSHUFHQWRI*'3LQ3RUWXJDO

2QHVLJQLILFDQWGHYHORSPHQWLQZDVWKHSKDVLQJRXWRIDLGIRUVKLSEXLOGLQJDWWKH(8OHYHO 'XULQJWKHSDVWWZRRUWKUHHGHFDGHVVRPH0HPEHU6WDWHVKDYHVSHQWVXEVWDQWLDODPRXQWV RISXEOLFIXQGVWRFRXQWHUDQDWXUDOVWUXFWXUDOFKDQJHDQGSDUWO\XQIDLUFRPSHWLWLRQIURP QDWLRQVLQWKH)DU(DVW(QGLQJWKLVDLGZDVDFRXUDJHRXVEXWDOVRKLJKO\DSSURSULDWHVWHS WDNHQE\PLQLVWHUV

(21)

&RPSHWLWLRQSROLF\

&RPSHWLWLRQOHJLVODWLRQDQGDXWKRULWLHV

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

0HUJHUDQGDFTXLVLWLRQOHJLVODWLRQZDVVWUHQJWKHQHGLQ6SDLQDQGWKH$XVWULDQ&DUWHO&RXUWKDV EHHQDOORZHGWRUDLVH FDVHV DW LWV RZQ GLVFUHWLRQ 0DQGDWRU\ QRWLILFDWLRQ RI 0 $·V ZDV PDGHFRPSXOVRU\LQ'HQPDUNDQGLVFXUUHQWO\EHLQJFRQVLGHUHGLQ)UDQFH,UHODQGDQGWKH 8. KDYH DQQRXQFHG QHZ OHJLVODWLRQ WKDWZLOO PRYH WKH GHFLVLRQPDNLQJ RQ 0 $ IURP PLQLVWHUVWRWKHFRPSHWLWLRQDXWKRULWLHV

$OVR *UHHFH KDV WDNHQ PHDVXUHV WR EULQJ QDWLRQDO OHJLVODWLRQ PRUH LQWR OLQH ZLWK (8 UHJXODWLRQ 3RUWXJDO LV FRQWHPSODWLQJ D QHZ FRPSHWLWLRQ ODZ DQG WKH HVWDEOLVKPHQW RI D QHZUHJXODWRU\FRPSHWLWLRQDXWKRULW\6HYHUDO0HPEHU 6WDWHV KDYHHQKDQFHG WKH SRZHUV DQGWKHUHVRXUFHVRIWKHFRPSHWLWLRQDXWKRULWLHVWRVWUHQJWKHQWKHLUFDSDFLW\WRLQYHVWLJDWH DQGHQIRUFHH[LVWLQJUHJXODWLRQ

$OWKRXJKPRVW0HPEHU6WDWHVQRZKDYHHTXLYDOHQWOHJLVODWLRQDVUHJDUGVFRPSHWLWLRQODZV FRQFHUQVKDYHEHHQUDLVHGLIWKHLQGHSHQGHQFHRIWKHFRPSHWLWLRQDXWKRULWLHVLVVXIILFLHQW LQVRPH0HPEHU6WDWHV

+DYLQJHVWDEOLVKHGWKHRYHUDOOIUDPHZRUNQHFHVVDU\IRUFRPSHWLWLRQDXWKRULWLHVWKHQH[W VWHS LV WRPDNH PDUNHWV ZRUN LQ D WUXO\ FRPSHWLWLYH PDQQHU 6RPH 0HPEHU 6WDWHV KDYH KLJKOLJKWHGWKHLPSRUWDQFHRIFRPSHWLWLRQSROLF\KDYLQJVXSSRUWIURPERWKWKHSROLWLFDO VSKHUH DQG WKH JHQHUDO SXEOLF 7KXV LW PXVW EH PDGH FOHDU WKDW DFWLRQ DJDLQVW VSHFLILF EXVLQHVVHV DQG VHFWRUV LV IXQGDPHQWDOO\ MXVWLILHG E\ WKH ZLVK WR SURWHFW FRQVXPHUV DQG JHQHUDWH EHQHILWV IRU WKHVRFLHW\ ,QWKLVVHQVH FRPSHWLWLRQ SROLF\ VKRXOG EH VHHQ DV DQ LPSRUWDQWHOHPHQWRIWKHRYHUDOOFRQVXPHUSROLF\FIER[

(22)

%R[ &RQVXPHUSROLF\DQGFRQVXPHUSURWHFWLRQ

&RQVXPHUSROLF\DLPVDWVWUHQJWKHQLQJWKHUROHRIFRQVXPHUVZLWKDYLHZWRSURPRWHKHDOWKDQGVDIHW\DQG WRHQVXUHWKDWHFRQRPLFDQGOHJDOLQWHUHVWVRIFRQVXPHUVDUHVDIHJXDUGHG&RPSHWLWLYHPDUNHWVDUHWKHEHVW JXDUDQWHHWKDWFRQVXPHUVFDQFKRRVHEHWZHHQDZLGHUDQJHRIKLJKTXDOLW\JRRGVDQGVHUYLFHVDWIDLUSULFHV &RPSHWLWLYHPDUNHWVVWLPXODWHHIILFLHQF\DQGLQQRYDWLRQWKDWEHQHILWVEXVLQHVVHVDQGFRQVXPHUV

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

+RZHYHU LI PDUNHW RXWFRPHV GR QRW GHOLYHU WKH OHYHOV RI TXDOLW\ DQG VDIHW\ FRQVXPHUV GHPDQG PDUNHW SHUIRUPDQFH FDQQRW EH FRQVLGHUHG VDWLVIDFWRU\ ,W UHTXLUHV PRUH VSHFLILF SROLF\ LQWHUYHQWLRQV WKDQ LQIRUPDWLRQDQGWUDQVSDUHQF\WRWDFNOHWKLVNLQGRIPDUNHWIDLOXUH$KLJKOHYHORITXDOLW\DQGVDIHW\FDQEH DFKLHYHGE\PDNLQJJRRGVDQGVHUYLFHVVDIHUWKURXJKGLIIHUHQWVWDQGDUGVE\DPRUHFRKHUHQWDQDO\VLVRIULVNV WRFRQVXPHUVE\UHLQIRUFHGFRQVXPHUFRQILGHQFHDQGE\DEHWWHUHQIRUFHPHQWDQGUHVSRQVHWRHPHUJHQFLHV

2QHH[DPSOHLQUHFHQW\HDUVRIDPDUNHWIDLOXUHWKDWKDVEHHQWDFNOHGZLWKVSHFLDODFWLRQVLVWKHDUHDRIIRRG VDIHW\ LQ UHVSRQVH WR WKH %6( LQFLGHQWV 7KH :KLWH 3DSHU RQ )RRG 6DIHW\ DQG WKH HVWDEOLVKPHQW RI WKH LQGHSHQGHQW (XURSHDQ )RRG $XWKRULW\ VKRXOG EH VHHQ LQ WKLV FRQWH[W &RUUHVSRQGLQJ DFWLRQV DW QDWLRQDO OHYHOKDYHDOVREHHQWDNHQLQDOO0HPEHU6WDWHV

6HUYLFHVHFWRUVZLWKORZDQGUHVWULFWHGFRPSHWLWLRQ

2QHLPSRUWDQWDUHDZKHUHWDUJHWHGDFWLRQLVUHTXLUHGLVZLWKLQVHUYLFHVHFWRUVQRWFRYHUHG E\ VSHFLILF LQWHUQDO PDUNHW OHJLVODWLRQ 0RVW 0HPEHU 6WDWHV WKXV UHSRUW WKDW ODFN RI FRPSHWLWLRQ H[LVWV LQ VHYHUDO VHFWRUV IUHTXHQWO\ ZLWK UHIHUHQFH WR SULFHV WKDW DUH KLJK UHODWLYHWR(8DYHUDJHV

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

(23)

)HZ0HPEHU6WDWHVKDYHH[SOLFLWO\DGGUHVVHGWKHLVVXHRIEDUULHUVWRHQWU\LQWREXVLQHVVVHUYLFHV

VXFK DV ODZ\HUV DFFRXQWDQWV HWF GHVSLWH WKLV EHLQJ DQ DUHD FKDUDFWHULVHG E\ PDQ\ UHVWULFWLRQVDQGE\KDYLQJVRPHSRWHQWLDOIRUFURVVERUGHU FRPSHWLWLRQ*HUPDQ\ LV RQH H[FHSWLRQDVGLVFXVVLRQVDUHWDNLQJSODFHEHWZHHQWKHJRYHUQPHQWDQGFUDIWVDVVRFLDWLRQV ZLWK WKH SXUSRVH RI UHOD[LQJ WKH FRQGLWLRQV XQGHU ZKLFK SHRSOH DUH DOORZHG WR ZRUN LQGHSHQGHQWO\ZLWKLQDFUDIW

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

,PSURYLQJWKHHIILFLHQF\DQGTXDOLW\RISXEOLFDGPLQLVWUDWLRQVDQGVHUYLFHV

$QHIILFLHQWSXEOLFVHFWRURUJDQLVHGWRPHHWWKHQHHGVRIFLWL]HQVDQGEXVLQHVVHVLVDKLJK SULRULW\ LQ DOO 0HPEHU 6WDWHV %HVLGHV WKH HIIRUWV WR UHGXFH UHG WDSH DQG DGPLQLVWUDWLYH EXUGHQV LW LV D FKDOOHQJH WR FRQWLQXRXVO\ PDNH VXUH WKDW SXEOLF DGPLQLVWUDWLRQV ZRUN HIILFLHQWO\ DQG WKDW WKH VHUYLFHV SURYLGHG E\ WKH SXEOLF VHFWRU WR FLWL]HQV DUH SURGXFHG HIIHFWLYHO\DQGKDYHDKLJKTXDOLW\$WWKHVDPHWLPHKRZHYHULWPXVWEHHQVXUHGWKDWWKH SXEOLFVHFWRUGRHVQRWFRPSHWHXQIDLUO\ZLWKSULYDWHVHFWRUEXVLQHVVHV

%R[ *RRGSUDFWLFH,PSURYLQJWKHHIILFLHQF\RISXEOLFVHUYLFHV

6HYHUDO0HPEHU6WDWHVKDYHLQ WKH ODVW \HDUV H[SHULPHQWHG ZLWK ZD\V RI LQWURGXFLQJ FRPSHWLWLRQ LQWR WKH SURYLVLRQRISXEOLFVHUYLFHV/DVW\HDU·V$QQXDO5HSRUWUHIHUUHGLQWKLVFRQWH[WWRSROLF\HIIRUWVXQGHUZD\LQ )LQODQGWKH1HWKHUODQGVDQG6ZHGHQ

%HOJLXPKDVLQWURGXFHGDVFKHPH´7KH6WUDWHJLF3ODQQLQJ,QVWUXPHQWµLQLWV1DWLRQDO(PSOR\PHQW2IILFH ZKLFK LV VXSSRVHG WR HQKDQFH HIILFLHQF\ RI VHUYLFH SURYLVLRQ E\ LQWURGXFLQJ JRDOV FRQFHUQLQJ FRVWV XQLW SURGXFWLRQ DQG TXDOLW\ LQ SXEOLF DGPLQLVWUDWLRQ 7KH 1DWLRQDO (PSOR\PHQW 2IILFH KDV DOVR GHYHORSHG D EDODQFHGVFRUHFDUGPRGHO7KHVHLQVWUXPHQWVDOORZWKHPRQLWRULQJDQGUHDGMXVWLQJRIWKHLPSOHPHQWDWLRQRI NH\DVVLJQPHQWVDQGRIVWUXFWXUDOLPSURYHPHQWSURMHFWV

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

(DFK \HDU VWUDWHJLF JRDOV DUH VHW IRU WKH FRPLQJ \HDU 7KH SUHSDUDWLRQ PRQLWRULQJ DQG FRDFKLQJ RI WKLV SURFHVVLVHQVXUHGE\DVSHFLDOVWDIIGHSDUWPHQWFRRUGLQDWLQJWKHSURFHVVLQVLGHWKHRIILFH

,PSRUWDQWLQYHVWPHQWVKDYHEHHQPDGHWRPDQDJHWKHLQIRUPDWLRQV\VWHPDGDWDZDUHKRXVHZKLFKFRQWDLQV WKHGDWDRIWKHGLIIHUHQWPDQDJHPHQWFRQWUROSDQHOVKDVEHHQVHWXS$´FRPSXWHULVHGPDQDJHPHQWURRPµ KDVEHHQVHWXSZKLFKUHODWHVLQIRUPDWLRQRQUHVXOWVWRWKHVRFLDODQGHFRQRPLFHQYLURQPHQWLQZKLFKWKH 2IILFHRSHUDWHV

(24)

SURJUDPPHV KDYH PRUH UHFHQWO\ EHHQ LQLWLDWHG LQ RWKHU 0HPEHU 6WDWHV 7KH %HOJLXP &RSHUQLFXVSURMHFWWKH*HUPDQ´0RGHUQ6WDWH²0RGHUQ$GPLQLVWUDWLRQµSURMHFWDQGWKH 3RUWXJXHVH3XEOLF6HUYLFH4XDOLW\6\VWHPDLPDWFUHDWLQJDPRGHUQFLYLOVHUYLFHDQGEHWWHU PDQDJHPHQWDOOFRQVLVWLQJRIVHYHUDOVSHFLILFSURMHFWV

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

250 375 500 625 750 Price level, 1998

-25 -20 -15 -10 -5 0 5 10 Per cent FIN E IRL EL B D A I UK DK F S L NL Per cent P -25 -20 -15 -10 -5 0 5 10

DK EL I B IRL L P F NL FIN A E D UK S -25 -20 -15 -10 -5 0 5 10 Per cent Per cent

(25)

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

%R[ 0DLQWDLQLQJXQLYHUVDOVHUYLFHREOLJDWLRQV862

:KDWLV862"

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

0DLQWDLQLQJ862LQWHOHFRPPXQLFDWLRQV

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

5HTXLUHPHQW )XQGLQJPHFKDQLVP

'HQPDUN ,ISURYHQWKDWDGHILFLWH[LVWVLQWKHSUR

YLVLRQRI862WKHUHJXODWRUZLOOFROOHFW DFRQWULEXWLRQIURPIL[HGWHOHSKRQ\ VHUYLFHSURYLGHUVEDVHGRQWXUQRYHU

)LQODQG 'RPLQDQWRSHUDWRUPXVWVHUYHDOO

FXVWRPHUVLQWKHLUWHUULWRU\ 7KHLQFXPEHQWPXVWPHHWDOOXQLYHUVDOVHUYLFHFRVWV

)UDQFH 2EOLJDWLRQRIRYHUDOOJHRJUDSKLFVXSSO\ SKRQHERRNVSXEOLFSKRQHVDQGORZHU SULFHVIRUSRRUKRXVHKROGV

7ZRPHFKDQLVPVZHUHHVWDEOLVKHGLQ DPHFKDQLVPRILQWHUFRQQHFWLRQ FKDUJHVVXSSUHVVHGDWWKHHQGRI DQGDQDWLRQDOXQLYHUVDOVHUYLFHIXQGWR ZKLFKLVRSHUDWRUFRQWULEXWHVRQWKH EDVLVRILWVWUDIILFYROXPHWKLV PHFKDQLVPLVVWLOORSHUDWLQJ

6SDLQ 2EOLJDWLRQRIRYHUDOOJHRJUDSKLFVXSSO\

DQGSKRQHERRNV 7HOHIRQLFDKDVEHHQGHVLJQDWHGWKHGRPLQDQWRSHUDWRUDQGLVUHTXLUHGWR SURYLGHXQLYHUVDOVHUYLFHVXQWLOWKHHQG RI

6ZHGHQ 7HOLDLVREOLJHGWRSURYLGHWHOHSKRQH VHUYLFHVEHWZHHQIL[HGSRLQWVWRDOO UHJDUGOHVVRIZKHUHWKH\OLYHDWDQ DIIRUGDEOHSULFH

7KHLQFXPEHQWPXVWPHHWDOOXQLYHUVDO VHUYLFHFRVWV

8QLWHG.LQJGRP $FRQQHFWLRQWRWKHIL[HGQHWZRUNDEOH WRVXSSRUWYRLFHWHOHSKRQHDQGORZ VSHHGGDWDDQGID[WUDQVPLVVLRQWKH RSWLRQRIDPRUHUHVWULFWHGVHUYLFH SDFNDJHDWORZFRVWDQGUHDVRQDEOH JHRJUDSKLFDFFHVVWRSXEOLFFDOOER[HV DFURVVWKH8.DWDIIRUGDEOHSULFHV

%ULWLVK7HOHFRPLVUHVSRQVLEOHIRUWKH SURYLVLRQRI862EXWWKHFRVWRIWKH 862LVQRWUHLPEXUVHG.LQJVWRQ 7HOHFRPLVDOVRUHVSRQVLEOHIRUWKH SURYLVLRQRIXQLYHUVDOVHUYLFH

(26)

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

,UHODQG KDV PDGH DQG $XVWULD LV SODQQLQJ PDMRUUHYLVLRQV RI WKH WHOHFRPPXQLFDWLRQ ODZ ZKLOH VSHFLILFDPHQGPHQWVWRWKHH[LVWLQJIUDPHZRUNKDYHEHHQPDGHLQE\VRPH0HPEHU 6WDWHV)LQODQGFKDQJHGWKHUHJXODWLRQRIWDULIIVIRUUHQWLQJIL[HGOLQHV6SDLQLVLQWURGXFLQJ WRXJKHU DFFRXQWLQJ VWDQGDUGV IRU WKH GRPLQDQW RSHUDWRU WR PDNH DFFHVV FKDUJHV UHIOHFW FRVWVEHWWHUDQGDSULFHFDSKDVEHHQLPSOHPHQWHGIRUWHOHVHUYLFHVDQGWKHOHDVLQJRIIL[HG OLQHV6ZHGHQLVFRQVLGHULQJPHDVXUHVWRHQIRUFHWKLUGSDUW\DFFHVVWRIL[HGOLQHV

,QPRELOH WHOHFRPPXQLFDWLRQV 6SDLQ KDV HQIRUFHG DFFRXQWLQJ VHSDUDWLRQ IRU LQWHUFRQQHFWLRQ FKDUJHVIRUWKHWZRGRPLQDQWRSHUDWRUVDQG6ZHGHQKDVHVWDEOLVKHGWKDWH[FHVVFDSDFLW\LQ WKHPRELOHQHWZRUNVPXVWEHRIIHUHGWRFRPSHWLWRUV7KH1HWKHUODQGV KDV LQWURGXFHGD UDQJH RI PHDVXUHV WR FRXQWHU WKH DSSDUHQW ODFN RI FRPSHWLWLRQ LQ FDEOH QHWZRUNV DQG ,UHODQGKDVHQVXUHGHDVLHUDFFHVVIRUGRPHVWLFRSHUDWRUVWRVDWHOOLWHFDSDFLW\

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

,W LV LPSRUWDQW WR HQVXUH WKH HIIHFWLYH DOORFDWLRQ RI D VFDUFH UHVRXUFH VXFK DV UDGLR VSHFWUXP $OWKRXJK GLIIHUHQW FRXQWULHV KDYH DGRSWHG GLIIHUHQW PHFKDQLVPV ² VXFK DV DXFWLRQV DQG EHDXW\ FRQWHVWV ² RYHUDOO WKH DLP LV WKH VDPH 7R HQVXUH WKH FRQWLQXLQJ GHYHORSPHQW RI D YLEUDQW DQG LQQRYDWLYH WHOHFRPPXQLFDWLRQV VHFWRU GHOLYHULQJ FKRLFH TXDOLW\DQGYDOXHIRUPRQH\WRWKHFRQVXPHU

2SHQLQJRIHQHUJ\PDUNHWV

(27)

$V D FRQVHTXHQFH RI WKH RSHQLQJ RI PDUNHWV WKH HQHUJ\ VHFWRU LV EHLQJ UHVWUXFWXUHG DV FRPSDQLHV VHHN WR REWDLQ DVVHWV LQ DOO SDUWV RI WKH YDOXH FKDLQ LQ HQHUJ\ SURGXFWLRQ WR HQVXUH WKH DELOLW\ WR RIIHU FXVWRPHUV D UDQJH RI HQHUJ\ SURGXFWV DQG WR VHFXUH DVVHWV DEURDG WR FRXQWHU WKH ORVV RQ GRPHVWLF PDUNHWV WKDW IRUPHU QDWLRQDO PRQRSROLHV QHFHVVDULO\ PXVW H[SHFW $V HQHUJ\ ILUPV DUH LQFUHDVLQJO\ GLYHUVLI\LQJ WKHLU DFWLYLWLHV WKH FKDOOHQJHVRIJRYHUQPHQWUHJXODWLRQDQGUHJXODWRUVFKDQJH,QVRPH0HPEHU6WDWHVVXFK DV'HQPDUN*UHHFH,UHODQG/X[HPERXUJ6SDLQDQGWKH8.WKLVKDVOHGWRGHFLVLRQVRQ WKHHVWDEOLVKPHQWRIRUSODQVWRHVWDEOLVKXQLILHGHQHUJ\UHJXODWRUZLWKLQWKHODVWWZR\HDUV,QRWKHU 0HPEHU 6WDWHV VHSDUDWH UHJXODWRUV DUH PDLQWDLQHG LQ HQHUJ\ PDUNHWV 7KXVLQGHSHQGHQW HOHFWULFLW\UHJXODWRUVZHUHVHWXSLQLQ$XVWULDDQG)UDQFH

7KHHOHFWULFLW\ GLUHFWLYH ZDV ILQDOO\ WUDQVSRVHG LQ )UDQFH DQG /X[HPERXUJ LQ ZKLOH *UHHFHLVH[SHFWLQJQDWLRQDOOHJLVODWLRQWREHFRPHLQOLQHZLWKWKHGLUHFWLYHLQ,UHODQG LVSUHSDULQJVHFRQGDU\OHJLVODWLRQWRHQVXUHWKHSURSHUWUDQVSRVLWLRQRIWKHGLUHFWLYH

+RZHYHUDOPRVWDOO0HPEHU6WDWHVDUHRSHQLQJHOHFWULFLW\PDUNHWVIDVWHUDQGPRUHYLJRURXVO\WKDQ UHTXLUHGE\WKHGLUHFWLYH7KHPDUNHWLVDOUHDG\FRPSOHWHO\OLEHUDOLVHGLQ)LQODQG*HUPDQ\ 6ZHGHQ DQG WKH 8. DQG $XVWULD ZLOO IROORZ LQ 2FWREHU 6HYHUDO 0HPEHU 6WDWHV GHFLGHG LQ WR VSHHG XS WKH OLEHUDOLVDWLRQ SURFHVV DQG PRVW H[SHFW IXOO\ OLEHUDOLVHG HOHFWULFLW\PDUNHWVE\

([SHULHQFHVIURPWKHIURQWUXQQHUVLQSDUWLFXODU6ZHGHQDQGWKH8.VKRZWKDWDGGLWLRQDO PHDVXUHV PD\ EH UHTXLUHG WR HQVXUH WKDW PDUNHWV DUH DFWXDOO\ FRPSHWLWLYH 0RUHRYHU LI WKHVH PHDVXUHV DUH LPSOHPHQWHG VXFK DV WKH UHPRYDO RI UHTXLUHPHQWV RI H[SHQVLYH PHWHULQJ HTXLSPHQW LQ 6ZHGHQ WKH LPSDFW RQ FRPSHWLWLRQ SDUWLFXODUO\ LQ WKH VPDOO FXVWRPHUVHJPHQWRIWKHPDUNHWFDQEHVLJQLILFDQW

)LQODQGKDVGHFLGHGWRWLJKWHQWKHUHTXLUHPHQWVIRUXQEXQGOLQJRIPRQRSRO\DQGPDUNHWDFWLYLWLHV

RIWKHHOHFWULFLW\FRPSDQLHVDQG$XVWULDKDVDVDJRDOWRSURFHHGLQWKHVDPHGLUHFWLRQLQ (OHFWULFLW\SRROVKDYHLQEHHQ HVWDEOLVKHG LQ *HUPDQ\DQG ,UHODQG DQG ,WDO\ H[SHFWVRQHWRFRPHRQVWUHDPLQ7KH8.ZLOOEHLQWURGXFLQJDQHZDUUDQJHPHQWIRU ZKROHVDOHHOHFWULFLW\WUDGHZKLFKLVH[SHFWHGWRHQKDQFHFRPSHWLWLYHSUHVVXUHVDQGORZHU SULFHV )LQODQG ZLOO LQWURGXFH D QHZ ODZ WR DYRLG WKH QHHG IRU LQVWDOODWLRQ RI H[SHQVLYH PHWHULQJHTXLSPHQWZKLFKPD\RWKHUZLVHPDNHLWSURKLELWLYHH[SHQVLYHWRVZLWFKVXSSOLHU

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

(28)

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

%R[ *RRGSUDFWLFH(QVXULQJFRPSHWLWLRQLQQHWZRUNLQGXVWULHV

6LQFHPDQ\QHWZRUNLQGXVWULHVDUHUDWKHUFRQFHQWUDWHGDQGUHTXLUHODUJHLQYHVWPHQWVHQVXULQJFRPSHWLWLRQLQ WKHVH PDUNHWV LV D NH\ FKDOOHQJH 7KHUHIRUH OLEHUDOLVDWLRQ SHU VH LV QRW HQRXJK DQG IXUWKHU PHDVXUHV DUH QHHGHG

6LQFH D VLJQLILFDQW OLEHUDOLVDWLRQ RI QHWZRUN LQGXVWULHV KDV WDNHQ SODFH LQ6SDLQ 7KH JRYHUQPHQW DGRSWHGDSSURSULDWHOHJLVODWLRQHOLPLQDWLQJOHJDOEDUULHUVWRFRPSHWLWLRQLQQHWZRUNLQGXVWULHVZKLFKH[FHHGV WKH UHTXLUHPHQWV ODLG GRZQ LQ WKH FRUUHVSRQGLQJ (& GLUHFWLYHV $Q LQGHSHQGHQW UHJXODWRU\ DXWKRULW\ ZDV HVWDEOLVKHG/LEHUDOLVDWLRQZDVDFFRPSDQLHGE\WKHSULYDWLVDWLRQRIVWDWHRZQHGFRPSDQLHV

6WULFW OLPLWV ZHUH SODFHG RQ WKH H[SDQVLRQ RI GRPLQDQW RSHUDWRUV LQ HOHFWULF SRZHU OLTXLG DQG JDV K\GURFDUERQVLQRUGHUWRSUHYHQWWKHPIURPJDLQLQJGRPLQDQWPDUNHWSRZHU(JLQHOHFWULFLW\JURXSVZLWK LQVWDOOHGSRZHUJUHDWHUWKDQSHUFHQWRIWKHWRWDOPDUNHWPD\QRWDGGQHZFDSDFLW\LQWKHIROORZLQJILYH \HDUV)RUPDUNHWVKDUHVEHWZHHQDQGSHUFHQWWKHSURKLELWLRQVWDQGVIRUDSHULRGRI\HDUV

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

(29)

)LQDOO\WKHUHPD\EHDQHHGIRUIXUWKHULQLWLDWLYHVDWWKH(8OHYHO7KHRSHQLQJRIQDWLRQDO HQHUJ\PDUNHWVLVRQO\RQHVWHSDOEHLWDQLPSRUWDQWRQHWRZDUGVWKHFUHDWLQJRIDXQLILHG (XURSHDQ HQHUJ\ PDUNHW FRUUHVSRQGLQJ IRU LQVWDQFH WR WKH KLJKO\ LQWHJUDWHG 1RUGLF HOHFWULFLW\PDUNHW,QRUGHUIRUWKLVWRPDWHULDOLVHLWPD\HJEHQHFHVVDU\WRHVWDEOLVKD FRPPRQ IUDPHZRUN IRU WDULIIV IRU FURVVERUGHU WUDGH LQ HQHUJ\ DQG EDUULHUV IRU WKH LQWHUFRQQHFWLRQRIQDWLRQDOQHWZRUNVVKRXOGEHHOLPLQDWHG

3URJUHVVLQRWKHUQHWZRUNLQGXVWULHV

:KLOHPDUNHWRSHQLQJKDVSURJUHVVHGLQWHOHFRPPXQLFDWLRQVDQGHQHUJ\IHZUHIRUPVKDYH EHHQLQWURGXFHGLQRWKHUQHWZRUNLQGXVWULHVLQUHFHQW\HDUV,QUDLOZD\VDVZHOODVSRVWDO VHUYLFHVWKHUHDUHSURQRXQFHGGLIIHUHQFHVEHWZHHQ0HPEHU6WDWHVLQWKHGHJUHHRIPDUNHW RSHQLQJ UDQJLQJ IURP FRPSOHWHO\ RSHQ WR DOPRVW PRQRSRO\ PDUNHWV 0XFK FDQ XQGRXEWHGO\EHOHDUQHGIURPIURQWUXQQHUVVXFKDV6ZHGHQLQSRVWDOVHUYLFHV

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

%HLQJDIURQWUXQQHULQWKHRSHQLQJRISRVWDOVHUYLFHVPDUNHWV6ZHGHQLQWURGXFHGLQODWH QHZ PHDVXUHV WR HQKDQFH FRPSHWLWLRQ 7KHVH LQFOXGHG HJ WKH LQWURGXFWLRQ RI D FRRUGLQDWHGV\VWHPIRUKDQGOLQJRIDGGUHVVFKDQJHVDQGWKHUHGLUHFWLRQRIPDLO,Q6ZHGHQ EXWDOVRLQ$XVWULDDQG*HUPDQ\WKHUHLVHYLGHQFHWKDWLQFUHDVHGFRPSHWLWLRQKDVOHGWR LPSURYHGVHUYLFHTXDOLW\DQGDZLGHUUDQJHRISURGXFWVZKLOHXQLYHUVDOVHUYLFHREOLJDWLRQV VHHPWRKDYHEHHQPDLQWDLQHGVDWLVIDFWRULO\

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

,QWKH1HWKHUODQGVDQHZSDVVHQJHUWUDQVSRUWDFWZDVSDVVHGLQDQGZLOOFRPHLQWRHIIHFW LQ:KHQIXOO\LPSOHPHQWHGE\DOOUHJLRQDODQGXUEDQWUDQVSRUWZLOOEHVXEMHFW WRSXEOLFWHQGHU1HZUHJXODWLRQRIDLUSRUWVLVEHLQJFRQVLGHUHGLQWKH8.+DYLQJWKHPRVW FRQJHVWHGDLUSRUWVLQ(XURSHVORWDOORFDWLRQUHJXODWLRQPD\EHFKDQJHGWRDOORZIRUWUDGLQJ DQGDXFWLRQLQJDQGWKHFXUUHQWV\VWHPRIJUDQGIDWKHULQJRIVORWVLVEHLQJUHFRQVLGHUHG

3ULYDWLVDWLRQ

Figure

Updating...

References

Updating...