pce ) price index - was nearly 6½ percent. and high inflation is a key concern in many countries around the world. even before russia's invasion of ukraine, the rapid global economic rebound had driven up prices for oil and many other commodities. higher inflation is especially detrimental for those who are least able to meet the growing cost of essentials like food, housing, and transportation. the war in ukraine and the global response present even greater challenges and uncertainty. for example, russia and ukraine are large exporters of key materials, including neon, palladium, and platinum. those materials are used in the production of a wide array of products, from auto parts to computer chips. even before the war, 2 / 5 bis - central bankers'speeches manufacturers were confronting shortages of important inputs. further disruptions to these key products could create spillovers to economies across the globe. but there are differences in the ways in which countries are experiencing inflation. in the united states, we are now seeing elevated inflation across many categories of goods and services. meanwhile, in europe, which is heavily dependent on russia for energy, rising prices of oil and natural gas are the biggest concern. and in the middle east, there are fears of a wheat shortage, given the region's reliance on wheat from russia and ukraine. the one bright spot regarding inflation is that longer - run inflation expectations remain well anchored. this anchoring is seen in both market - based measures of expected inflation and in surveys of households and economists. for example, the new york fed's survey of consumer expectations has fielded special survey questions on fiveyear - ahead inflation expectations since 2019, and these expectations have hardly budged since the start of the pandemic. 2 in addition, the pass - through of inflation surprises to revisions in three - year - ahead inflation expectations is about half as large as it was before 2020. 3 that is, medium - term inflation expectations in this survey are less responsive to inflation shocks than they were before the pandemic. economic outlook faced with rising inflation but otherwise strong economies, the federal reserve and other central banks have been moving away from the extraordinarily accommodative stances they took in early 2020. last year, many emerging market central banks raised their policy rates. in december, the bank of england followed suit, followed by the bank of canada this march. closer to home, the fomc decided a little over two weeks ago to raise the target range for the

the owners. the implementation of basel iii – not only in europe but hopefully in the united states, too – is therefore an important step towards making the financial system safer. in addition to the implementation of basel iii, i am convinced that it would make the banking sector less vulnerable and, thus, strengthen its liability if banks were required to hold sufficient capital for claims on sovereigns and not be allowed to accumulate them on too large a scale in future. • the principle of liability is also important with regard to the establishment of a european banking union, which is currently the subject of heated debate. the main task of the single resolution mechanism that is currently being developed is to ensure the correct sequence of liability. if a bank is to be restructured or resolved, equity investors should be called on first to take losses, followed by the providers of debt capital and only then by depositors, taking due account of deposit guarantees in the respective member states and national or european rescue funds. taxpayers should only be called upon as a very last resort. while joint liability implies joint control, the other way round is also true. however, even after the creation of a banking union, banks ’ balance sheets also remain a mirror of national economic and legal developments. changes in national insolvency law i. e. would have an impact on the burden possibly to be financed by european funds. hence, the banking union needs far - reaching coordination and tighter joint regulation. remaining room for manoeuvre in regulation at national level has to be considered when deciding on the distribution of the financial burden between the bis central bankers ’ speeches member states. legacy risks, however, should not be related to the banking union. if it is actually decided to communitise legacy debts, this would be a financial transfer. transparency for members of the general public and taxpayers then also requires that this transfer be disclosed as such. of course, transfers are usually not reinforcing the liability principle. it goes without saying that strengthening the liability principle goes beyond bank regulation. regulatory measures in other fields of the financial system have to make sure that non - bank financial entities become more liable and accountable, too. let me give you two examples in future, credit rating agencies will be held liable in the event of intentional or grossly negligent violations of the respective european regulation. i appreciate this, but it is clear that it will be difficult to prove deliberate intent or gross negligence in practice. however, while making credit rating agencies more liable and