and resilience of banks has increased significantly as they have built on the regulatory reforms and supervisory efforts that followed the great financial crisis. this has enabled them to support households and firms through the economic hardships stemming from the pandemic. we need banks to be able to do the same in the context of the current macroeconomic and climate challenges. we want banks to thrive. and we need them to play their role in the economy, now and in the future. this is why we continue to push them to assess whether their risk management tools and practices are still fit for purpose, and to improve them where necessary. and it's why we insist that banks should remain prudent and not take favourable developments in net interest income for granted. let me conclude. as banking supervisors, much of what we have to do echoes the mindset of monetary policymakers. we have to remain on our guard. we are committed to delivering on our mandate of keeping the banking system safe and sound. we will make sure that the banks under our supervision remain mindful of and resilient to the risks that may emerge. and we will use all the instruments at our disposal. this goes beyond our formal supervisory measures. it means that, in our ongoing supervisory interactions with banks, we will be perceptive with our eyes, receptive with our ears and – whenever necessary and appropriate – insistent with our mouths and intrusive with our presence and through our actions. attentive to risks. always promoting prudence. to make sure that my future speaking notes can continue to refer to healthy and resilient banks in the euro area, irrespective of the tides and currents that come to our shores. vielen dank fur ihre aufmerksamkeit. 1 lagarde, c. ( 2022 ), " monetary policy in a high inflation environment : commitment and clarity ", lecture organised by eesti pank and dedicated to professor ragnar nurkse, tallinn, 4 november. 2 nagel, j. ( 2022 ), " die pandemie und ihre okonomischen auswirkungen ", speech at the wirtschaftsclub karlsruhe, 10 november. 4 / 5 bis - central bankers'speeches 3 enria, a. ( 2002 ), " better safe than sorry : banking supervision in the wake of exogenous shocks ", speech at the austrian financial authority supervisory conference 2022, vienna, 4 october. 4

still needed as several sectors in various areas remain burdened by excessive regulation. these delays act as a brake on the flexibility and competition that is required to improve the long - term sustainable employment and growth prospects. one area still requiring much attention, as i already mentioned, is the labour market. the potential benefits, in terms of higher aggregate welfare and employment growth, of reforming euro area labour markets are high. following the reforms implemented in the 1990s, positive effects can already be felt. these include the stronger employment growth and the sharp decline in unemployment rates recorded in the euro area in recent years. progress with labour market structural reforms has, however, been very uneven among euro area countries. indeed, rigidities persist. for example, although the euro area unemployment rate in 2001 stood at 8. 5 %, survey studies show that companies often had problems in recruiting workers. such labour mismatches demonstrate that more reforms are needed not only to increase labour supply and demand and improve job creation, but also to increase the likelihood that vacancies be filled and the unemployed find work more quickly. in addition, an unemployment rate still above 8 %, low levels of labour force participation and uneven labour market performances across euro area countries clearly indicate that further measures need to be taken. reforms, in particular, are required to improve job intermediation, to enhance wage flexibility and increase wage differentiation, to improve education and to promote training and life - long learning in order to maintain and develop human capital. moreover, reforms of the tax and benefit systems, the introduction of less restrictive employment protection, working time flexibility, and measures to increase labour mobility are also needed. it is also important to keep in mind that these reforms should be carried out in a broader, more systematic and co - ordinated manner across sectors and countries than at present. if the objective is to transform the euro area into the most competitive and dynamic economy in the world, as was decided at the lisbon european council in 2000, more efforts are needed. challenges for fiscal policy i would now like to devote my attention to fiscal policy. national fiscal policies in europe are guided by the budgetary provisions contained in the maastricht treaty and in the stability and growth pact. the provisions in the maastricht treaty, which limit the levels of government deficit and government debt, have been key to achieving sounder public finances. the stability and growth pact, agreed upon in 1997, introduced the target of a budgetary position close to balance or in surplus