prices alone explains more than half of the headline inflation figure. in the medium term, it is critical whether rising energy prices will increase inflation expectations and wages or change firms'pricing behaviour. energy inflation and supply chain bottlenecks alone would not lead to a sustained acceleration in inflation unless there are major second round effects, leading to a wage - price spiral. unlike in the united states, with its labour market red hot, wage inflation in the euro area has been rather moderate – until recently, that is. we have seen clear signs of acceleration in the first months of this year. that ’ s why we must be mindful of not letting inflation expectations become unanchored, which would be very damaging to price stability. this is now the single most critical factor in determining the course of monetary policy. last december, the ecb governing council started the gradual process of monetary policy normalisation. and we have been fortunate to have our renewed monetary policy strategy in place as we face the current turmoil. the ecb strategy review was a critical turning point in ecb monetary policy. it was the final step in the process of making the ecb a modern central bank since mario draghi ’ s “ whatever it takes ” speech. the ultimate reason for the strategy review was the emergence of profound structural changes in the euro area and the world economy. these include the change in the relationship between the spare capacity of the economy and inflation, the fall in natural interest rates, and sluggish productivity growth. according to the revised strategy, price stability – the primary objective of the ecb – is best maintained by aiming for 2 % inflation over the medium term. the inflation target is symmetric : the governing council considers both inflation above and below this 2 % target to be equally undesirable. the new strategy was worked out in 2020 – 21 in a disinflationary, even deflationary environment, and it serves to ensure that the economy does not get stuck in a situation of too slow inflation for a prolonged period. the governing council also stated that inflation may also be temporarily moderately above the target. the medium - term orientation of monetary policy allows for a better emphasis in decision - making on other objectives that are important for all euro area countries, such as full employment, without, of course, jeopardizing price stability. i tell you this also to illustrate how quickly the operating environment of monetary policy has changed. it was still less than a year ago, i recall, that some commentators

part of economics or finance in the universities. but we need solid research foundations upon which to build our models ; hence, this situation needs to change. and we at the central banks must play our part in taking this discipline forward. after all, it is in our own interest to be able to assess the financial stability impact of climate change as well as the climate risks posed on our own balance sheets. we need to lead the way. and leading the way is what this conference has always been about. the systemic risk analytics conference has always taken onboard excellent papers that are innovative in terms of their approach and topic. to continue this tradition, i was delighted to see what we have on the agenda at this year ’ s conference. for what i see in the presentations is a lot of novel thinking and new approaches to analysis. these are the kinds of action we need in order to take things forward, which is a necessity, given the tasks ahead. i hope that the presentations in this conference give you ideas on how to extend your thinking beyond the traditional approaches. and i hope this in turn helps you to develop new approaches that might take your own field of research forward. so, i wish you all a fruitful conference. 2 / 2 bis central bankers'speeches