of the euro area. also, at a regional level outside europe, progress is ongoing in asia towards strengthening the asian financial safety net, known as the chiang mai initiative multilateralisation ( cmim ), with the doubling of the cmim fund to usd 240 billion. in parallel, important steps have been taken to mitigate the spreading of risks within a highly interconnected global financial system, making it more resilient to unexpected events : bis central bankers ’ speeches systemically important financial institutions, which contribute to the spreading of risks given their high level of interconnectedness, will be subject to stricter capital requirements under the basel iii agreement ; financial infrastructures have been made more resilient. first, the financial stability board is working on safeguards aimed at promoting global clearing in order to facilitate access to, and the use of, global clearing houses. second, regulators and overseers have just finalised a new set of regulatory principles for financial market infrastructures aimed at ensuring that any such infrastructures, whether domestic or global, will be better able to withstand shocks and unforeseen events. moreover, regulators and overseers are required to adopt regimes for effective cooperation with each other. 2. further improvements to global financial stability nets while all these measures have undoubtedly made an important contribution to stabilising the global economy, many observers have argued that gaps remain in the current global financial safety nets. existing mechanisms for dealing with crises have been seen as being deficient in three respects : ( i ) insufficient amount of financial fire - power ; ( ii ) insufficiently flexible or fast decision - making and ( iii ) insufficient coordination with respect to both financing and surveillance. these deficiencies have been seen as leading countries to increase their foreign exchange reserve holdings. for the holders, the great attraction of reserves is that they provide instantaneous and unconditional liquidity. however, the accumulation of a large stock of reserves is not only based on precautionary motives. moreover, even at the level of the individual holder, there are downsides as reserves come with a quasi - fiscal cost. 1 how can we go forward and what can be done differently? overall, there is widespread agreement about what a global mechanism should do : ( i ) reduce the demand for selfinsurance through reserves accumulation ; ( ii ) provide fast - disbursing financial assistance in large amounts to the “ innocent bystanders ” ; and ( iii ) reduce global imbalances. 2 however, it is clear

- 222 ; and galı, j., gertler, m. and lopez - salido, j. d. ( 2003 ), „ european inflation dynamics ”, european economic review, vol 47 ( 4 ), pp. 759 - 760. 7. more accurately, inflation depends on the gap between marginal costs and a frictionless optimal level. 8. ratner, d. and sim, j. w. ( 2022 ), “ who killed the phillips curve? a murder mystery ”, finance and economics discussion series 2022 - 028. washington : board of governors of the federal reserve system ; see also stansbury, a. and summers, l. h. ( 2020 ), “ the declining worker power hypothesis : an explanation for the recent evolution of the american economy ”, nber working paper, no 27193. 9. other factors explaining the secular decline in the labour share relate to technology and globalisation. for an overview, see dao et al. ( 2017 ), “ drivers of declining labor share of income ”, chapter 3 of the april 2017 imf world economic outlook. 10. see also galı et al. ( 2003, op. cit. ). 11. real wages are defined as compensation per employee deflated by the hicp. 12. see battistini et al. ( 2022 ), “ wage share dynamics and second - round effects on inflation after energy price surges in the 1970s and today ”, published as part of the ecb economic bulletin, issue 5 / 2022. 13. for example, the lowest quintile of the income distribution spends around 35 % of their income on utilities and transport services ( i. e. energy - intensive consumption ), while the top quintile spends less than 10 %. 14. schnabel, i. ( 2022 ), “ the globalisation of inflation ”, speech at a conference organised by the osterreichische vereinigung fur finanzanalyse und asset management, vienna, 11 may. 15. jorda et al. ( 2022 ), “ wage growth when inflation is high ”, frbsf economic letter 2022 - 25, 6 september ; and carstens, a. ( 2022 ), “ the return of inflation ”, speech at the international center for monetary and banking studies, geneva, 5 april. 16. overall, however, only around 3 % of private sector