come. for instance, we may have to pay a premium for some time to attract uncontracted liquified natural gas to replace russian gas. in the longer term, the need to diversify is also likely to accelerate the green transition in europe, and massive investment in renewables will boost both energy supply and aggregate demand over time. but during the transition phase, we face uncertain effects on both sides of the economy. we could see lower investment in oil and gas production, putting upward pressure on fossil fuel prices while demand for those fuels still remains high. at the same time, writing off existing carbon - intensive capital might produce a negative wealth effect and lower aggregate demand. as a result, all of the main forces that drove expanding supply over the past decades and cushioned global demand – the role of china, supply chains, abundant energy – are changing. and the net effect on aggregate supply and aggregate demand will only become clear in time. in this context, the three themes i mentioned at the beginning are crucial : ensuring price stability as the different shocks play out ; lifting constraints on growth in the areas where they have emerged ; and safeguarding a resilient financial sector which can support the transitions we will face. ensuring price stability for monetary policy, this changing environment creates considerable challenges. inflation in the euro area is far too high, having reached double digits in october for the first time since the start of the monetary union. and with inflation likely to remain high for an extended period, we need to monitor the evolution of inflation expectations very carefully. additionally, although recent data on gdp growth have surprised on the upside, the risk of recession has increased. at the same time, historical experience suggests that a recession is unlikely to bring down inflation significantly, at least in the short run. in this setting, displaying commitment to our mandate is vital to ensure that inflation expectations remain anchored and second - round effects do not take hold. that is why we have been raising rates at our fastest pace ever – by 200 basis points in our last three policy meetings. these rate increases help us to withdraw support for demand more quickly. and they send a clear signal to the public of our determination to bring down inflation, which will help anchor expectations. we expect to raise rates further – and withdrawing accommodation may not be enough. ultimately, we will raise rates to levels that bring inflation back down to our medium - term target in a timely manner. as i explained recently, how far we need to go, and how fast

, para ( 1 ), of the capital requirements regulation ( crr ) : “ capital requirements for credit risk on exposures to small and medium sized enterprises shall be multiplied by the factor 0. 7619. ” bis central bankers ’ speeches 1 january 2016 with a 10 - year phase - in period, the capital requirements for certain securitised products will increase significantly, thus potentially reducing insurers ’ willingness to allocate funds to such asset classes. the appropriateness of the capital charges in solvency ii and their consistency with the capital requirement rules under the crd iv are currently being reviewed by eiopa. in this regard, particular attention needs to be paid to providing a level playing field for banks and insurers as well as to enhancing long - term financing of the real economy through the securitisation of debt. conclusion in the nearer term, how can the impediments to bank funding of smes be addressed? in essence, these impediments are of three types : the banks ’ own funding conditions, their perception of the credit risk of their clients, and lack of capital. the ecb does not have a magic wand. the central bank cannot compensate for a shortage, or a misallocation of equity. that is something that has to be addressed, in one form or the other, by other stakeholders. neither can the central bank alter the credit risk of individual borrowers, although governments can have an impact here through reforms that improve the operating environment of those firms – labour and product market regulation for instance. where the central bank has a direct role, within its mandate, is primarily with respect to bank funding conditions. indeed, the ecb has taken and will continue to take appropriate measures to ensure that bank funding is not a source of financial fragmentation or an impediment to bank lending. it is reasonable to think that simultaneous action on all three counts, by the relevant stakeholders in each case, would be mutually reinforcing. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches