a single market in financial services, barriers must be removed. mainly, this consists of a great deal of harmonization. the current crisis also demonstrates the importance what the imf has been underlining for quite a while : that regulatory and supervisory structures must follow the reality of the financial markets. as national financial institutions merge into multinationals, financial supervision must follow. there is a lot of work ongoing in this regard, and the financial crisis has given this work new impetus. as i said, the eurosystem is agnostic about the international role of the euro. global usage of the euro is not policy goal. that said, the euro does have several strengths as an international currency. there is also work under way, aimed at improving the single market, that should, as a byproduct, make it an even stronger contender. the us dollar is not likely to lose its dominating role any time soon. but partly because of the ongoing crisis, partly due to progress in financial integration and structural reform in the euro area, it looks likely that the no. 2 position of the euro could well be growing stronger in the coming years.

also be factors that have kept wages in check. whatever the correct explanation for the slow reaction in wages so far, improving our understanding of wage - setting in the current environment should be high on the research agenda. the second force that can impinge on price stability is public indebtedness. the level of public debt in many jurisdictions has increased rapidly because of the pandemic, and factors such as population ageing will increasingly put further pressure on public finances. clearly, it is of paramount importance that sufficient fiscal restraint and debt sustainability should be key priorities going forward. this is also a necessary condition for the long - term viability of our monetary policy strategy. in periods when the natural rate of interest is low and policy rates are at the effective lower bound, the importance and effectiveness of fiscal policy in stimulating the economy is heightened. but once the economy is well on its way to recovery, fiscal policy should take a back seat, and governments should regain fiscal policy space by consolidating public finances. this means reducing budget deficits and boosting potential growth. currently, as inflation has become a serious threat to the economy, and monetary policy is being tightened, fiscal policy should focus on debt sustainability. thus, also the envisaged support measures of households due to the energy crisis should be targeted, tailored and temporary. heterogeneity among the euro area countries regarding their fiscal situations poses an additional challenge, as it increases fragmentation risk. to ensure that the monetary policy stance is transmitted appropriately across jurisdictions, the ecb governing council decided, in july, on a new monetary policy tool, the transmission protection instrument ( tpi ). if deemed necessary, it would allow the eurosystem to purchase securities on the secondary market in jurisdictions that experience an unwarranted deterioration in financing conditions according to certain criteria. this brings me to the third and final force, namely the formation of expectations. ultimately, the risks to longer - term price stability, whether resulting from wage - price dynamics or perhaps from fiscal concerns, is linked to the risk that inflation expectations will become de - anchored. the risk of deanchoring, in turn, rests critically on the way expectations are formed. for instance, fiscal dominance might become an issue if economic agents begin to emphasize the connection between fiscal sustainability and inflation, and form expectations about inflation based on perceived fiscally irresponsible government behaviour. needless to say, independent central banks like the ecb will not give any space for fiscal dominance.