their combined offering of investment products. spanish banks manage a large part of the assets of investment funds and sell insurance products. evidence of this is the strong rate of growth of deposits in recent months, showing a notable response by banks. accordingly, frenkel ’ s phrase does not apply to spain on the liabilities side : there is still a lot left on the liabilities side of spanish banks ’ balance sheets, in particular a broad deposit base and a significant volume of wholesale financing that matures in the medium and long term. if we now look at what is happening on the assets side, spanish banks have not invested in the complex and opaque products that have turned out to be highly problematic or, as people usually now say, “ toxic ”. admittedly, we are seeing a sharp rise in the doubtful assets ratio ; however, this is not linked to this type of complex product, rather it is linked to developments in the real economy and therefore what may be called a classic banking cycle problem. accordingly, on the left - hand side of the balance sheet there is still a lot right in spain. spanish banks ’ assets, even taking into account the rise in doubtful assets, are largely of good quality. the fact that spanish banks ’ assets are mostly high - quality and that they have a liabilities structure in line with the activity they finance, in terms of maturities and the degree of permanence, is related to their business model. in contrast to the originate - to - distribute model, the activity of spanish banks is based mainly on attracting savings to lend to businesses and households and, in the process, maintaining close and lasting links with their customers. this business model has normally been known as " traditional " banking, and many analysts prior to the summer of 2007 equated the concept of traditional with “ antiquated ”. true, just as the originate - to - distribute model has limitations, which have been laid bare, so too does traditional banking, insofar as it may indeed be antiquated in its management strategies and risk and cost control procedures. consequently, it does not seem right to me to call spanish banks “ traditional ” : spanish banks bend over backwards for the customer, obtain information and management advantages from their detailed knowledge of their customers and have demonstrated their innovative capacity in the marketing of different products, in their risk control and management mechanisms, and in the application of organisational developments and technological processes, enabling the sector to become one of the world's most

2022 to developments in inflation are admittedly in the minority. nonetheless, the figure ( 30 % ) is notably higher than it was at the end of 2021, when it stood at 17 %. of even more concern is the fact that this figure rises to 50 % of the total when considering the agreements entering into force in 2023, albeit still referring to a small number of agreements in this case. fourth, any incomes agreement should provide for multi - year wage increase and job protection - related undertakings. this would offer households and businesses some certainty in their spending and investment decisions. any agreements concerning wage increases should take their lead from the underlying inflation. these recommendations apply to both wage increases and, where applicable, to potential wage guarantee clauses. arrangements such as these have already been used by the social partners in the past and have proven a useful tool for protecting jobs, making firms more competitive and spurring economic growth. 10 fifth, these guidelines on wage developments should be accompanied by explicit commitments to moderate profit margins. only then will such wage restraint actually make firms more competitive, while, in turn, limiting the extent to which rising energy input costs are passed through to other goods and services in the economy. and some sort of mechanism would have to be set in place to ensure this restraint in profit margins can be verified. the simulations performed using the quarterly macroeconometric model of the banco de espana ( mtbe ) underscore the benefits of a successful incomes policy. the mtbe the weight of energy inputs in production and exposure to international competition vary considerably across sectors and firms. to varying degrees, these types of clauses mean that, regardless of the type of underlying shock, any potential future price rises automatically pass through to wage increases, thereby triggering the second - round effects we hope to avoid. for instance, the 2nd 2012 - 2014 employment and collective bargaining agreement, signed at the start of 2012, set out wage recommendations that excluded the energy component from any wage settlements in the event, as is currently the case, of rising energy prices. makes it possible to estimate how a reaction in other domestic prices and in private wages, in line with the direct impact of higher energy prices on the general price level, might affect activity and employment. if higher energy prices are fully passed through, the overall adverse impact on activity and employment, in terms of the divergence from the current projections, could be around 1. 5 pp in 2024. moreover, real disposable household income would decline,