market well during the ongoing financial market turbulence. the collateral framework, which has been in place since the start of the emu, has proven robust, in particular during the current financial market turbulences. due to this built - in flexibility and robustness, the eurosystem could effectively step in when intermediation in interbank markets deteriorated. moreover, the share of deposited collateral not used to cover credit from monetary policy operations has remained large on an aggregate level, suggesting that availability of collateral has not been a constraint on the euroystem ’ s counterparties in the wake of the turbulences. it is important to recall that, as the turbulences went on, central banks strengthened their cooperation, first through enhanced information exchange and collective monitoring of market developments and later on by coordinated steps to provide liquidity. as an example of joint actions between central banks during the turbulences, in december 2007 the ecb agreed with the us federal reserve to grant loans in dollars with a maturity of one month to euro area banks, against collateral eligible for eurosystem credit operations, in connection with the federal reserve new us dollar term auction facility ( taf ). the eurosystem loans were financed through a currency arrangement ( swap line ) with the federal reserve, and granted at a fixed rate equal to the marginal rate of the simultaneous federal reserve tenders. the first two operations, for an amount of usd 10 billion each, were settled in december 2007 and renewed in january 2008. similar operations were also carried out by the swiss national bank. these liquidity - providing operations did not have a direct effect on euro liquidity conditions, but were conducted to address the funding of euro area banks in us dollars and aimed at improving global funding conditions. since these coordinated actions, the g - 10 central banks have continued to work closely together and to consult regularly on liquidity pressures in funding markets. owing to continued pressures observed in the money market, the ecb, as well as the swiss national bank, resumed in march 2008 the us dollar liquidity providing operations in connection with the federal reserve term auction facility, every second week for as long as needed, and for an increased amount of usd 15 billion each. this amount was further increased to usd 25 billion each, on 2 may 2008. it is important to stress that the action in connection with the taf marked, to my knowledge, the first systematic and multilateral central bank co - operation in the money market field, a market which is central to the implementation

the first risk relates to the record high levels of public and private debt reached during the pandemic, which make debt dynamics more sensitive to inflation undershooting. an accounting exercise indicates that if euro area inflation were to undershoot our baseline by 1 percentage point each year for five years, the private debt ratio would increase by around 7 percentage points. this is equivalent to firms and households taking on €900 billion in extra debt at a time when debt needs to be reduced. [ 25 ] that could depress investment and consumption and further reduce inflation. for governments, a similar exercise implies a 5 percentage point increase in the public debt ratio compared with the baseline over five years, and a 10 percentage point increase over ten years. [ 26 ] and for countries facing debt - to - gdp ratios of around 150 %, ten years of inflation undershooting could increase their debt ratio by approximately 15 percentage points. this is the opposite of what we need at a time when interest rates are near the lower bound and fiscal policy is a transmission channel of monetary policy. the second risk comes from the inequality that will likely result from the outsized impact of the pandemic on less advantaged groups. these groups typically have a higher propensity to consume, so a fall in their share of labour income would hold back domestic demand and inflation. moreover, if they cannot reintegrate into the labour market we could see long - lasting effects, including a permanent loss of human capital. [ 27 ] the best way to achieve that reintegration and contain scarring is through faster growth. getting back to our pre - crisis growth path would imply a 3 % increase in gdp by 2022 [ 28 ], which estimates suggest would create millions of new jobs. [ 29 ] that, in turn, would lead more quickly to tightness in the labour market, supporting wage growth and the return of inflation to our aim. it would also boost the life chances of the poorest members of society. for example, a 1 percentage point narrowing of the overall unemployment gap in the euro area reduces the unemployment rate of ‘ lowskilled ’ workers by 1. 3 percentage points more than the unemployment rate of ‘ high - skilled ’ workers. vibrant labour markets are the most effective way to support those who have lost the most from the pandemic and to reduce inequality. the third risk is that persistently weak economic activity can reduce productivity. [ 31 ] long periods of inactivity may hurt labour productivity through