the euro area ”, economic bulletin, issue 4, ecb. 5. for the increasing importance of services in the harmonised index of consumer prices, see baldwin, r. ( 2022 ), “ globotics and macroeconomics : globalisation and automation of the service sector ”, paper presented at the ecb forum on central banking, sintra, 27 - 29 june 2022. 6. however, 1. 1 % of workers are still enrolled in job retention schemes. 7. compensation per employee. 8. international energy agency ( 2022 ), “ the role of critical minerals in clean energy transitions ”, revised versin, march. 9. kuik, f., morris, r. and sun, y. ( 2022 ), “ the impact of climate change on activity and prices – insights from a survey of leading firms ”, economic bulletin, issue 4, ecb ; bua, g., kapp, d., kuik, f. and lis, e. ( 2021 ), “ eu emissions allowance prices in the context of the ecb ’ s climate change action plan ”, economic bulletin, issue 6, ecb. 10. lagarde, c. ( 2022 ), “ monetary policy normalisation in the euro area ”, the ecb blog, 23 may.

the assessment of the prospects for the financial markets and for deriving some lessons. at the early stages of the crisis, when it was still contained to the us sub - prime mortgage markets, delinquency rates on us sub - prime mortgages increased markedly after mid - 2005, for two main reasons. first, the interest rate charged on sub - prime mortgages is initially much lower than for a standard mortgage, but it is typically reset to a much higher rate, usually after a two to three year period. second, high rates of house price inflation since the early 1990s had encouraged some households to borrow for house purchases with the intention of refinancing, or repaying the mortgage, before the reset date. once interest rates on these mortgages started to rise, and house prices began to moderate and subsequently to fall, many borrowers were unable to service their loans, sometimes even before the reset date if they had been aggressively betting on further house price increases. the developments in delinquency rates and house price inflation are shown in the charts on slide 5. what are the prospects for the sub - prime mortgage markets? recall that the typical fixedrate period for adjustable - rate mortgages is two to three years, after which they are reset and tied to one of a number of common indices, which are closely related to market interest rates. notwithstanding a slight decrease in these indices as of recently, an estimated usd 400 billion of sub - prime mortgages will face a reset in interest rates over the next two years. the surge in delinquency rates quickly translated into falling values of residential mortgagebacked securities ( rmbss ), especially those backed by the most recently originated vintages of loans. the values of such securities, and the indices of credit default swaps ( cdss ) on such securities, have mostly continued to deteriorate until today ( see chart on the left of slide 6 ) ; box 2 of the review examines these issues in detail. the fact that claims on the cash - flows generated by sub - prime mortgages were embedded in a broad array of structured credit products, often layered on top of one another, explains why the unexpectedly severe credit losses on the underlying us sub - prime mortgages and the risk of potential future credit losses had such widespread effects on the financial system. the announcement by some rating agencies in early july that they would downgrade many asset - backed securities ( abss ) and collateralised debt obligations ( cdos ) backed by