found that soundly capitalised banks tend to lend more. 5 our experience in the euro area corroborates this view. the phasing in of new regulatory standards has helped bring about a measurable increase in euro banks ’ capital ratios in recent years. in parallel, and supported by the ecb ’ s comprehensive monetary policy measures, bank loans to the real economy have recovered steadily from their cyclical ( and historical ) troughs and, towards the end of last year, were increasing at their fastest pace since the crisis. 6 this suggests that a sound regulatory framework is an essential element of a country ’ s growth agenda. but in an integrated global economy, financial regulation has to rely on internationally agreed standards. to the extent that countries around the world are signing up to these standards, the conditions for growth in a financially stable environment are being reinforced globally. of course, this does not mean that we should not look back and evaluate critically what has been done already. the fsb, together with other bodies, will undertake a broad evaluation of the individual and combined effects of past reforms. it will assess if the initial objectives have 1 / 3 bis central bankers'speeches been achieved or if there are any unintended consequences that call for changes to the regulatory framework. it will also assess whether reforms aimed at different industries or market segments have created conflicting incentives. and it will take stock of the progress achieved in curbing risk taking outside of the banking sector and in strengthening the resilience of financial market infrastructures. but this exercise should not be mistaken for tolerance of hidden forms of financial protectionism or a relaxation of regulation. turning back the clock on international financial regulation would revive distrust, create financial fragmentation, and risk regulatory arbitrage and a race to the bottom. the stakes are too high to allow such short - termism to thrive. while unilateral financial deregulation may yield quick benefits, its potentially harmful implications for financial stability and, ultimately, economic growth are not likely to be felt until later. and then, those implications would be felt worldwide. ultimately, this would leave the most vulnerable members of society very exposed. more than ever, we europeans are convinced that belonging to the european union ( eu ) helps us maximise the benefits of international cooperation. it minimises the risks of short - sighted unilateralism. it offers a framework that disciplines member states to work towards the common objectives and values enshrined in our treaties. it leverages

which data are lagging, was already reabsorbed, by and large, by the end of the summer of last year, as strong demand is bringing more and more people – also those at the fringes of the labour market – back into work. 1 while total hours worked still remained below pre - pandemic levels in the third quarter of last year, there are good reasons to believe that the widespread easing of contact restrictions will help accelerate progress on that front too. survey evidence confirms the picture of a tightening labour market. a rapidly rising share of firms across all economic sectors report shortages of labour as a factor limiting production. this is now the case for about a quarter to a third of all firms, a level never before observed in the euro area ( slide 6, left - hand chart ). vacancy rates across the euro area are significantly higher than before the pandemic, which is consistent with firms reporting continued strong employment demand ahead ( slide 6, right - hand chart ). these developments will add to pressure on wages as our economies continue to reopen. although negotiated wage growth remains moderate, our latest corporate telephone survey among larger firms showed that wage pressures are expected to build up fast. euro area firms anticipate considerably higher wage increases in the near term. for 2022, their average expected wage increase is 3. 5 %. the survey also showed that higher input costs, such as wages, are being passed through to consumer prices at a faster pace and to a larger extent than in the past, as strong pent - up demand creates a favourable environment for protecting or boosting profit margins. a faster pass - through, in turn, implies that for medium - term price pressures it is less relevant how fast wages expand today than how fast they will grow this year and next. pipeline pressures remain elevated third, pipeline pressures, which affect consumer price inflation with a lag, continue to build up. import price inflation for intermediate and final consumer goods has increased further and remains at extraordinarily high levels ( slide 7, left - hand chart ). at the later stages of the pricing chain, domestic producer price inflation reached a new all - time high in november. 3 / 8 bis central bankers'speeches the inflation rate of services producer prices, which are an important element in the cost structure of both manufacturing and services firms, stands at 4. 3 %, which is almost nine times as high as its historical average. all services sectors report stronger price pressures than before the