somewhat, by partly compensating households for higher energy prices through both indirect tax reductions and transfers. looking forward, efforts should be made to increasingly target measures on vulnerable households to keep public finances in check, while at the same time setting the right incentives for reducing the use of fossil energy and dependence on russian energy. moreover, a successful implementation of the investment and reform plans under the next generation eu programme would accelerate the energy and green transitions, enhancing long - term growth and resilience. the impact of the war on the european financial sector let me now turn to the impact of the war on the financial sector. so far, the fallout from the war has not posed a direct threat to financial stability. financial markets have been highly volatile since the start of the invasion but continue to function in an orderly manner. overall, the immediate economic effects of the russian invasion have generally been manageable for the euro area banking sector, and the banking system has not experienced any liquidity shortages. at the same time market valuations of banks have declined, but this mainly reflected broader concerns about a weaker economic outlook in light of rising energy and commodity prices, and the associated lower prospects for bank profitability. the aggregate direct exposure of the euro area banking sector to russia is anyhow limited and concentrated, and concerned banks are taking steps to reduce it further. the non - bank financial sector ’ s direct exposure to russian assets is also limited. while increases in fund outflows may cause liquidity risks to surface and spill over to the banking sector, stress has been contained so far. funds with higher share of russian securities mitigated such risk also with the use of liquidity management tools, such as suspension of redemptions. moreover, financial institutions have largely already incurred the possible losses on dollar and euro - denominated russian external sovereign debt, owing to the drop in market value of these 2 / 4 bis central bankers'speeches assets. commodity markets have been the main transmission channel for stress up to now. elevated commodity prices increase financial stability concerns associated with high inflation and low growth. furthermore, the extreme volatility of prices has led to some stress in commodity derivatives markets, although there has been no major incident so far. financial institutions have limited net exposures on commodity derivatives and banks acting as clearing members are generally safeguarded by robust credit - risk management frameworks. bigger net exposures are held by energy producers and suppliers, commodity traders, as well as energy - dependent firms who use commodity derivatives

circumstances, the automatic stabilisers should only be allowed to work fully in those countries whose budget positions are close to balance or in surplus. let me emphasise that a medium - term perspective is essential for the conduct of fiscal policies in all euro area countries. short - term discretionary measures aimed at strengthening domestic demand risk having an unwelcome impact on the economy, not least on account of time lags. in addition, if such measures are not consistent with the pact, they may undermine the credibility of the consolidation process. in their efforts to set the conditions for further expanding the production potential of the euro area, governments should also give more impetus to the implementation of structural reforms. selective fiscal reforms, including those related to pension reforms, should provide the correct incentives to economic agents. labour and product market reforms will be beneficial to employment growth in the euro area and improve the resilience of the euro area economy to adverse shocks in the future. finally, i should like to draw your attention to a press release that was issued today on the ecb decision on the denominations, specifications, reproduction, exchange and withdrawal of euro banknotes.