higher rate for 2023 ( 6. 3 % ) than expected in september ( 5. 5 % ) and june ( 3. 5 % ). inflation is then expected to fall gradually to an average of 3. 4 % in 2024 ( compared with the september forecast of 2. 3 % ) and of 2. 3 % in 2025. the upward revision to inflation for 2023 and 2024 is the result of recent inflation data reflecting, as i mentioned earlier, a stronger and more persistent inflationary episode than expected, the fiscal measures adopted to soften the impact of inflation on households and firms ( which reduce inflation in the short term but increase it when they are rolled back ) and the expectations, in line with the latest information, for stronger wage growth. the aforementioned macroeconomic context has also triggered a deterioration in financial stability. the combination of higher inflation and lower - than - expected economic growth, together with rising interest rates, is adversely affecting households'and firms'ability to pay, especially among the most vulnerable segments, which are characterised by low income levels, dependence on energy and food products and, in some cases, high indebtedness. 2 / 8 bis - central bankers'speeches meanwhile, the high levels of government debt following the pandemic, alongside the tightening of financial conditions, represent a vulnerability and limit the space to adopt fiscal expansion measures. this setting is also subject to an extremely high level of uncertainty, stemming, above all, from the course of the war in ukraine and its economic repercussions, which are hard to predict. however, inflationary pressures also pose a genuine risk. whether they increase further depends not only on the course of the war, but also on internal factors, such as a possible persistent rise in inflation expectations, or higher - thanexpected increases in wages or mark - ups. more persistent inflation would require a sharper tightening of monetary policy, which would render those public or private agents in a less sound economic and financial position more vulnerable. this could have a greater - than - expected impact on their spending levels. 1. the economic policy response against this backdrop, i would like to share my opinion on how economic policy should respond. first, i would like to underscore that the current situation is far different from that triggered by the pandemic. we then faced a temporary but highly adverse shock, in a setting free of inflationary pressures. that environment warranted a forceful monetary policy response, in order

. it is estimated that in the united states the cross - border ownership of capital across states enables 40 % of the asymmetric shocks affecting a state to be diluted among the rest through private capital markets. however, in the euro area such dilution is only 10 %, owing to a greater national bias in asset holdings. the main private channel for risk dilution in the euro area at present is that of lending by the european banks that operate in different member states. but this channel becomes unstable and may even shrink or disappear in situations of uncertainty owing to the link between sovereign states and their domestic banks. as is known, capital markets in europe are less developed and less integrated than in the united states. corporate financing on equity markets is very limited and, moreover, shows a strong national bias. in the united states, cross - border holdings of assets play a significant role in mitigating the shocks that affect a state. however, in europe this mechanism is very limited. this is why it is crucial to complete the capital markets union project so as to achieve greater depth and integration of european union capital markets. that will allow for greater risk - sharing in private euro area channels and less reliance on bank financing, which will result in greater stability in the euro area. the aim of this project is to provide new financing sources for firms at a lower cost, and at the same time to attract more foreign investment towards the european union. to achieve this, the european commission proposed a plan of action in 2015 with over 30 measures to construct an integrated capital market in the european union, to be completed by 2019. however, so far, the implementation of these measures has been slow and incomplete. it is a far - reaching project requiring highly diverse measures, including most notably the creation of market infrastructure, the harmonisation of market regulation and supervision, and the strengthening of the european supervisory authorities. 6 / 7 there is also a need to move towards harmonising insolvency arrangements, both for banks and non - financial corporations, and to tackle aspects such as the bias in some countries ’ tax systems towards debt as opposed to equity financing. moreover, this project takes on particular importance in the context of the exit from the european union of the united kingdom, which currently plays a key role as a european financial centre. in connection with the capital markets union, some initiatives have been adopted to provide financing for those segments with scant access to bank lending. one example is the innovation projects for which the promotion of