Even with the prevalence of dollar indexation across the region, exchange rate appreciation would still help promote cheaper imports and higher living standards.

Most G8 countries seem incapable of achieving the political consensus required to take necessary steps such as raising the retirement age or significantly cutting the indexation of benefits to inflation.

Moreover, as public confidence in the de linked oil currencies increases over time, dollar indexation of private contracts will diminish, and currency movements will have a greater impact on overall prices.

In order to prevent pathological inflationary dynamics from becoming embedded even more deeply in the structure of the economy (including through wage indexation), Volcker dramatically changed the policy stance and made inflation public enemy number one.

Regarding interest on or indexation of arrears, should the General Assembly decide to introduce interest charges on arrears, the rate should be fixed at a low level and should not have retroactive effect, and the annual rate should not exceed 1 per cent.