however, in the medium term the sources of financing of the european economy should become more diversified, so the action plan for capital markets union ( cmu ) should be ambitiously pursued. a further challenge that accompanies the current recovery is, in addition to new waves of the pandemic, asymmetry between sectors and countries. this issue is partly addressed by the recovery and resilience package known as the next generation eu. the package has not only been designed to boost aggregate demand in the medium term but also addresses longer - term challenges such as greening of the economy, europe's lag in digitalisation, country - specific structural challenges and 2 / 3 bis - central bankers'speeches economic resilience in general. the package has been designed to channel more resources to vulnerable, most affected countries. the success of the package is important not only for increasing aggregate demand and strengthening long - term economic potential, but also for the possibility of future use of such a solidarity mechanism of financing investments and reforms. further progress in european fiscal integration would be welcome, but this should go hand - in - hand with fiscal prudence and reduction of risks. to strengthen economic and financial resilience, action is urgently needed in various areas, not just economic ones, which is an important lesson from this health crisis. in addition to lowering the risk of future pandemics, which could otherwise emerge more often than in the past, we need to address more consistently the risks related to climate change. governments and parliaments have a key role to play, but we should also contribute to the efforts, each institution within its own mandate. at the eurosystem, we are gradually incorporating this ambition into various areas of activity, from monetary policy and management of the non - monetary portfolio to banking supervision and monitoring financial stability. the pandemic crisis has accelerated digitalisation, which also represents a path to faster recovery. as our lives become increasingly digital, be this in terms of interpersonal communication, finance or health services, we are becoming more vulnerable to cyber attacks, which continue to spread and are becoming more sophisticated. efforts need to focus not only on protecting critical infrastructure, but also on raising wider societal awareness and a culture of cybersecurity. * * * the topics i have touched on will be discussed in the panels of this forum. so let me conclude with a final thought that the decisive and well - coordinated response of national and eu economic policies to the pandemic shock has revealed

exceptionally accommodative after coping with the lengthy period of deflationary pressures and the pandemic shock. let me now turn to inflation, the key variable of our monetary policy. a series of supply - side disruptions and a rapid recovery in global demand have pushed inflation significantly above our medium - term target of 2 %, after almost a decade of too - low inflation. this might not necessarily be an undesirable development, if the reasons behind the pick - up in inflation were about to fade soon, bringing inflation swiftly to its target. however, inflation expectations have adjusted and shifted upwards, with financial market and consumer survey indicators pointing to inflation between 2 % and 3 % in the medium and longer - term. 2 moreover, expected inflation is becoming an important element in price setting in euro area firms, as shown by the ecb survey. 3 high inflation – coupled with labour market tightness - has also triggered calls for higher wage rises. the ecb's experimental wage tracker so far points to a moderate increase in wage growth in this year and the next, below the projected inflation in the euro area. however, the longer the high 2 / 5 bis - central bankers'speeches inflation rates persist, the likelier it is that they will be transmitted to higher wage growth and potentially lead to a wage - price spiral. in the medium term, therefore it seems possible that inflation will settle at higher levels than we have observed in the recent years, even after the existing supply shocks fade. we could face a switch to a higher inflation regime, as some of the drivers of past deflationary pressures have lost steam, such as global trade liberalisation and the integration of low - wage chinese workers to the global economy. at the same time, some structural inflationary factors are gaining momentum, namely the green transition, strengthening of the eu's strategic autonomy and the reorganisation of global supply chains with possible nearshoring. there will still be some deflationary forces at play, such as rapid digital transformation, other innovation and elevated debt levels, but there is a question as to whether these could overcome the inflationary forces. let me now turn to monetary policy. given the high inflation in the euro area, reaching 8. 1 % annually in may and ranging from 5. 4 % in malta to 20. 1 % in estonia, together with strengthening inflation expectations, we need to make further steps towards normalisation of our monetary policy. after we ended net asset purchases under the