supply and rapidly rising interest rates. these market conditions have created a particularly favourable environment for banks ’ profitability. role. now that the conditions allow it, the time has come to return to a system of guarantees based on ordinary criteria. 21 looking ahead, the high capital levels and the foreseeable reduction in profitability could push banks towards consolidation, including at cross - border level. consolidation deals must be made by improving efficiency and creating strong, profitable intermediaries that can better serve the real economy. greater integration of the banking market at european level would increase the soundness of banks and allow them to operate in multiple countries, diversifying risks and strengthening the provision of services to households and firms. the banking union needs to be completed by establishing a european deposit guarantee scheme and improving the bank crisis management framework. creating a european capital market is also necessary. the most important – though not the only – condition for achieving this goal is the introduction of a european safe asset, 22 which is essential for the operation of financial markets. 23 non - bank financial intermediaries non - bank intermediaries have become the main financial players, both globally and in the euro area. in italy, banks continue to predominate, but non - bank intermediaries are growing rapidly ( figure 5 ). the draft budget law for 2025 reduces the ceiling for guarantees that can be issued by the italian fund created to improve access to credit for smes from €200 billion to €160 billion. this ceiling was €225 billion in 2023. in the five - year period 2015 - 19, the total guarantees issued by the fund amounted to about €60 billion. in addition to introducing a safe asset, we must draft a consolidated european law on finance, strengthen centralized supervision of non - bank financial intermediaries, and standardize corporate crisis management procedures ; see f. panetta, ‘ europe needs to think bigger to build its capital markets union ’, the ecb blog, 30 august 2023 ; and f. panetta, ‘ the governor ’ s concluding remarks for 2023 ’, rome, 31 may 2024. a european safe asset would allow for better pricing of financial products, such as corporate bonds and derivatives, encouraging their expansion ; it would provide a form of collateral that could be used across all market segments, including for cross - border transactions ; and it would serve as the basis for foreign central banks ’ reserves in euros, strengthening the global role of our currency. non - bank

https : / / www. rba. gov. au / speeches / 2017 / sp - gov - 2017 - 07 - 26. html 10 / 13 7 / 26 / 2017 the labour market and monetary policy | speeches | rba graph 9 when i spoke about this set of issues in a recent panel at the crawford school at anu, i made the point that some pick - up in aggregate wage growth over time would be a welcome development. some commentators saw this as the reserve bank governor making a rather unusual call to arms : a call for workers to demand larger wage increases from their employers. my intention was less dramatic. it was simply to make the point that a gradual pick - up in aggregate wages growth would be a positive development. the best outcome for both workers and firms is for any pick - up to be underpinned by a lift in productivity growth and more high - skill jobs. but even the current rate of productivity growth could sustain some increase in wages growth over time. indeed, some pick - up is incorporated into the bank's forecasts for the economy. a gradual lift in wage growth is a central element in our forecast for inflation to return to around the mid - point of the medium - term target range. policy implications i would now like to turn to some of the implications for monetary policy, both globally and in australia. the persistent slow growth in wages is creating a challenge for central banks. it is contributing to an extended period of inflation below target. in years gone by, the more standard challenge was to keep wage growth in check, so as to stop upward pressure on inflation, which could lead to restrictive monetary policy. no advanced economy faces this challenge at present. https : / / www. rba. gov. au / speeches / 2017 / sp - gov - 2017 - 07 - 26. html 11 / 13 7 / 26 / 2017 the labour market and monetary policy | speeches | rba it is possible that things could change in the not too distant future, particularly in those countries at, or near, full employment. it may be that the lags are just a bit longer than usual. if so, we could hit a point at which workers, having had only modest pay increases for a run of years, decide that it is time for a catch - up. if such a tipping point were reached, inflation pressures could emerge quite quickly. in this scenario we could see a period of turbulence in financial markets, given that markets are pricing in little