, nor through an excessive and permanent increase in public debt. from this perspective, labour and business in all euro - area countries must continue to behave responsibly. wage negotiations should not go back in time to when they were purely backward - looking. making up for the loss of purchasing power must instead rely on achieving sustained productivity growth. at the same time the pricing strategies of businesses will play a central role. in particular, we will have to closely monitor whether, after the pass - through of the higher energy costs observed in 2022, it will now work in reverse, with firms ’ mark - ups reflecting the most recent declines, a key step to achieving a durable reduction of underlying inflation. finally, although targeted and temporary fiscal measures to alleviate the burden on more severely hit households and firms should obviously not be ruled out, their financing should not put the progressive reduction of public debt at risk, and avoid further increasing its burden on the future generations. this is crucial not only to restore the necessary conditions for robust and lasting growth, but also to guarantee a timely return to the price stability target, the statutory objective of the central bank and an outcome that would be more difficult and costly to achieve in the event of excessive government transfers. references ando a. and brayton f. ( 1995 ), “ prices, wages, and employment in the us economy : a traditional model and tests of some alternatives ” in r. cross ( ed. ), natural rate of unemployment : reflections on 25 years of the hypothesis, cambridge, cambridge university press, cambridge, uk, pp. 256 - 298. bernanke b. s. ( 2007 ), “ inflation expectations and inflation forecasting ”, address delivered at the monetary economics workshop, national bureau of economic research – summer institute, cambridge, mass., 10 july. bernanke b. s. ( 2022 ), 21st century monetary policy : the federal reserve from the great inflation to covid - 19, w. w. norton & co, new york. blanchard o. ( 2016 ), “ the phillips curve : back to the ‘ 60s? ”, american economic review, vol. 196, no. 5, pp. 31 - 34. brainard w. c. ( 1967 ), “ uncertainty and the effectiveness of policy ”, american economic review, vol. 57, no. 2, pp. 411 - 425. cecchetti s., grasso a. and pericoli m. ( 202

itself and deployed to increase secondary market activities, in particular proprietary trading. over the last few years the crisis has heightened appreciation of the benefits of a more stringent regulatory regime. and much has been done to remedy the shortcomings of financial systems. at the international level, under the political impulse of the g - 20, the financial stability board and the basel committee on banking supervision introduced substantial regulatory changes to reduce the frequency of financial crises and increase the resilience of economic systems. improvements have been introduced in many areas such as bank capital and liquidity, otc market infrastructure, and compensation policies in finance ; importantly, new macro - prudential authorities have been established in many countries. but the regulatory overhaul has not yet been completed. several issues are still being actively discussed, such as the role of rating agencies and accounting standards. although new regulations on systemically important financial institutions have recently been approved, the “ too - big - to - fail ” issue is still a major concern. it would be foolish to pretend that defaults can be avoided, so we need to be prepared for their occurrence. the ongoing work on resolution regimes is a promising approach in this regard. rules alone are not enough, however. allow me to mention a few scattered areas from which progress should be expected : ● one element that is essential for guaranteeing systemic stability is the method of measuring risk - weighted assets ( rwa ), the denominator of capital adequacy ratios. rwa measures have recently attracted increasing attention from market analysts, banks and supervisory authorities. it has been argued that the methodologies for computing rwa may not be comparable across institutions and, especially, across jurisdictions, and that they should more properly reflect risk in order to avoid ultimately jeopardising financial stability. these problems highlight the relevance of supervisory practices in determining banks ’ capital requirements ( for example, in validating internal banks ’ models for calculating risk weights ). here, rigorous microprudential supervision is essential. we really need to work out a single rulebook, to move with determination towards taking joint responsibility and using peer reviews as much as possible in our supervisory activity. the watchword can only be : “ more and better supervision ”. ● furthermore, in today ’ s globalised world, it is crucial to make sure that countries cooperate and agree on the appropriate stringency of financial regulation. countries should not compete by relaxing rules in order to attract financial intermediaries, as this may generate negative externalities