like business units. we don ’ t know which approach will prevail. what we know is that part of the intermediation chain and of the payment system is moving outside the traditional financial ecosystem. incumbents are feeling the pressure of these changes. the potential for efficiency gains, increased accessibility to financial services and lower enduser costs are great, but great opportunities always come with great risks. safeguarding against risks without curbing innovation is the challenge regulators will face in the near future. existing rules have been designed for traditional activities and intermediaries. it is more and more difficult to understand how, when, and to which agents they can be applied. the temptation to over - regulate, minimizing the risks at the expenses of innovation, may be great. this, however, would not only be against the public interest, but also probably impossible, given the liquid nature of innovation. what regulators may reasonably do is to adopt a pragmatic, flexible approach, coordinated across jurisdictions and based on a continuous dialogue with the industry, as was recently suggested by the fsb. for the time being, approaches and stages of development vary considerably across jurisdictions. the majority of supervisors are still in the early stages of understanding the new phenomena. continued sharing of supervisory practices in this area is crucial. 2 / 2 bis central bankers'speeches

to have important negative effects on aggregate demand and, in turn, on the medium - term inflation outlook. while both monetary and fiscal policy may, in principle, counter the inflationary effects of energy costs, only the latter is able to directly influence these costs, also offsetting the loss in disposable income – at least in part and to the extent that it does not jeopardise debt sustainability – and limiting their impact on the economy. that said, the main response to what is essentially a tax cannot come from monetary policy, especially in the absence of a wage - price loop and with inflation expectations re - anchoring to the central bank ’ s objective. however, these issues emphasise the importance of swiftly designing a strategy, particularly at the european level, that, while in the short run helps to curb the unjustified spike in energy prices, on a more structural basis takes into consideration the issue of energy source diversification, energy storage and the identification of common resources for managing energy crises. it is a challenge that, today, goes hand in hand with the one posed by climate change and its resolution is essential also for avoiding uncontrolled and dangerous increases in the relative prices of fossil fuels. * * * the russian invasion of ukraine implies some very important changes in the economic outlook of the euro area and in the assessment of risks. further increases of energy prices will not only affect the short - term inflation outlook, but will also determine significant headwinds to domestic demand, while the announced sanctions and the sharp deterioration of russia ’ s economic conditions will weaken external demand and cause potential risks to financial stability. household and business confidence may be strongly shaken. this would result in a worsening of the prospects for gdp growth and, in turn, greater downside pressures to inflation in the medium - term, which could follow the large price increases observed so far and, perhaps, still to come over the rest of the year. the ecb staff has made some new baseline projections available – which were discussed by the governing council last week – built on the assumptions that disruptions to energy supplies and impacts on confidence are only temporary, while global supply chains are not significantly affected. overall, gdp growth is projected to 3. 7 per cent in 2022 and 2. 8 per cent in 2023, a downward revision of, respectively, 0. 5 and 0. 1 percentage points compared to december 2021. on the other hand, inflation is set to average 5. 1 per cent