Policy challenges and a coherent policy agenda

Important reforms have taken place at the euro area level and in Slovenia towards enhancing economic resiliency in the recent past. In particular, towards breaking the link between banks and sovereigns. Nevertheless, the link remains and there are additional sources of vulnerabilities that require advancing in the unfinished policy agenda at euro area level and pursuing a coherent policy approach at home. Decisive steps to finish the EMU architecture and reduce the exposure of the taxpayer to contingent liabilities are necessary to reduce spillovers and risks and enhance efficiency. This is particularly relevant taking into account risk arising from trade tensions, political uncertainty in EU member states, monetary policy divergence and strong resurgence of populism. Priority should be given to a coherent policy agenda aiming at completing risk sharing mechanisms at euro area level and at the same time enhancing resiliency at home.