garanzia, while guaranteed loans to large firms are those granted via sace ( the italian export credit agency ). the latest observation is for q1 2021. this policy dependence masks the true underlying state of the economy – particularly in terms of labour market scarring and corporate vulnerabilities – and therefore its resilience to less expansionary policies. the recovery will need to be well advanced before we can get a clear picture of the underlying damage. second, even with the ongoing monetary and fiscal policy support, our recovery is expected to be slow and incomplete in terms of both growth and inflation. in fact, the euro area economy is projected to return to its pre - crisis gdp level only in the middle of 2022 and to remain below its pre - crisis trend ( chart 9, left panel ). [ 24 ] gdp in the united states, in contrast, is projected to recover both its pre - crisis level this year and its trend thereafter ( chart 9, right panel ). the euro area and japan are the only major advanced economies where inflation is projected to remain subdued over the medium term. chart 9 diverging recoveries ( index : 2019 = 100 ) sources : ecb and federal reserve. this evidence suggests that we should avoid withdrawing policy support – either deliberately or by tolerating adverse spillovers – until the output gap is closed and we see inflation sustainably back at 2 %. for the ecb, this implies that we will have to maintain very favourable financing conditions well beyond the end of the pandemic period. the need for very accommodative policy over a longer period should in any case be uncontroversial, given that inflation remains well below our aim in our projection horizon and, according to survey measures of inflation expectations, even beyond it. towards more ambitious goals as i have made clear, europe has the capacity to overcome the pandemic and its economic consequences. so we face an important decision. we can act as a group of small, open economies, as we did after the global financial crisis, with each country competing to capture external demand. or we can behave how a large economy would, with european and national policymakers working together to raise internal demand through adequate policy stimulus. at this point in time, failure to pursue the latter option – reconnecting to the pre - crisis growth path and restoring healthy inflation levels – would increase the danger of the pandemic causing lasting damage to our economy. three risks stand out.

). any financial institution that may be systemically significant or critical if it fails should be subject to a resolution regime and to this effect, the fsb key attributes help to address one of the key themes of “ too - big - to - fail ” in global finance by making it possible to resolve any financial institution in an orderly manner, regardless of the size and complexity of the financial institution. two key themes emerge in this overarching area of resolution of sifis ; one, resolution authority, powers and hierarchy of stakeholders and two ; the detailed mechanisms for resolution such as the collateralization, safeguards and funding of firms in resolution. for resolution to be feasible, the authorities should have the required legal powers and the operational capacity to apply them in order to ensure the continuity of functions that are bis central bankers ’ speeches significant to the economy. the mechanisms employed in resolving problematic firms should follow the “ respect of creditor hierarchy ” and “ no creditors worse off than in liquidation ” principle ’ as laid down in the fsb key attributes. in other words, resolution powers should be exercised in a way that respects the hierarchy of claims while providing flexibility to depart from the general principle of equal treatment of creditors of the same class. in particular, equity should absorb losses first, and no loss should be imposed on senior debt holders until subordinated debt has been written - off entirely. creditors should have a right to compensation where they do not receive at a minimum what they would have received in a liquidation of the firm under the applicable insolvency regime. directors and officers of the firm under resolution should be protected in law, for instance, from law suits by shareholders or creditors for actions taken when complying with decisions of the resolution authority. i hope that the first training session this morning on the institutional framework within the eu and the sharing session on thursday about the german bank restructuring act will shed light on some of these issues. second key issue is that there is a need to put in place pre - determined methods of resolution, sources of funding and identified assets acceptable as collateral against such emergency funding in a crisis. most importantly, authorities should have statutory or other policies in place so that authorities are not constrained to rely on public ownership or bail - out funds as a means of resolving firms. therefore, in support of the preparations of recovery and resolution plans and the effective implementation of resolution measures in a crisis, a framework should be developed in advance. as they say, it is already too late to dig a