interaction, such as those linked to tourism, account for a large share of the economy. economic developments in spain, and in the rest of the world, have been affected by upward inflation surprises since the second half of 2021, driven in particular by energy and food, although there has also been a slight rise in underlying inflation. between december 2020 and march 2022, the annual increase in consumer prices rose from - 0. 6 % to 9. 8 %. the persistence and intensity of inflationary pressures reflect a combination of various demand and supply factors. notable among the demand factors are the relatively strong recovery in activity following its collapse in 2020 and the changing consumption patterns as a consequence of the pandemic and the measures adopted to contain it. among the supply factors, the higher price of energy - with major strains in the gas market - and the disruption to global supply chains stand out. this high global inflation environment was also reflected in expectations of monetary policy normalisation and, in consequence, a moderate tightening of private - sector financing conditions. as at global level, the repercussions of the war for the spanish economy are highly uncertain. spain ’ s direct exposure to the countries at war is low. however, the invasion of ukraine has also changed the economic environment and represents, at a time when the recovery from the pandemic remains incomplete, a new shock that can be expected to entail adverse consequences in the coming quarters for economic activity and inflationary pressures through various channels. of these channels, the most important is probably commodity markets, including markets for both energy and non - energy commodities, in particular foodstuffs and metals, of which russia and ukraine are both significant global producers and exporters. spain ’ s direct exposure to these imports is relatively low ; for example, in 2019 only 6 % of its total energy purchases from the rest of the world came from russia. this percentage is much higher in countries such as germany and italy ( 17 % and 22 %, respectively ). however, in a highly volatile environment, the war is affecting the cost of these goods on global markets, irrespective of their origin. in particular, the rise in energy prices has significant effects on the cost of the household consumption basket and on firms ’ costs of production. also, the war itself could ultimately hamper the supply of some of these goods, which would obviously tend to have a large impact on prices and economic activity. the european authorities have formally announced their intention to reduce structural energy dependence

are putting pressure on banks ’ profitability, in particular, regulatory reforms aimed at addressing vulnerabilities in the global banking system as well as deficiencies in the current framework. bis central bankers ’ speeches some of these reforms have already been implemented and banks have improved their resilience. solvency ratios have been reinforced with a new calibration of the requirements and the definition of the eligible capital instruments for the numerator of these ratios. however, different problems in the denominator related to the measurement of risk still persist and should also be addressed. in this regard, i would say that the major general outstanding issue to finalize the basel postcrisis reforms is how to mitigate the unwarranted variability in the risk weighted assets that are calculated by banks when using internal models. this revision should be feasible by striking a right balance between sensitivity, simplicity and comparability. there is a special focus also on avoiding significant increases for overall capital requirements. this means that, given that we have already reinforced the level and quality of capital for the overall banking industry, the impact on requirements of the current revision should be borne by those parts of the banking system where the major unwarranted low asset densities are located. this objective of reducing the unwarranted variability in risk - weighted assets could be achieved through the implementation of a combined set of measures that ensure risksensitivity and comparability. internal models are being revised with that objective in mind. first, there are some portfolios which should be defined as non - modelable, due to the scarcity of reliable data ( i. e. low default portfolios ). second, among those exposures or risks that are considered as modelable, there are reasons that justify the revision being undertaken on definitions and methodologies. and, third, consideration should be given to the inclusion of restrictions to model parameters as a means to facilitate the supervisory task, so avoiding abnormally low values for individual parameters. in order to limit unwarranted variability in risk - weighted assets, a common backstop that has enough granularity to ensure risk - sensitivity is also needed. in this regard, capital floors based on the standardized approaches and designed as a limit to the output of internal models may be considered. in this regard, the revision of standardized approaches is also relevant. this revision seeks to incorporate the lessons learned in order to increase their risk sensitivity avoiding undue complexity. and last, but not least,