especially in the face of persistent shocks. our ongoing analysis of household responses to high inflation and income variability ( lydon ( 2022 ), arrigoni et al. ( 2022 ), adhikari ( 2022 ) ) as well as to interest rate rises ( lyons et al ( 2022, fsr 1, box c ) ) will continue to highlight groups that are most vulnerable, allowing for appropriately target measures to be implemented. next, i want to move onto price stability and monetary policy, and how this interacts with inequality. price stability, monetary policy and inequality though central banks actions can have an impact on the distribution of wealth and income over shorter horizons, over the longer run their impact is likely to be small. as a tool that is primarily aimed at tackling cyclical fluctuations, monetary policy is unlikely to be a substantial driver of structural inequality. we know that downturns can lay bare the different types of inequality that are lurking beneath – as i mentioned above – but, the sources of inequality run deeper and, i believe, are more structural in nature than they are cyclical. but this does not mean that, as monetary policy makers, we should ignore it. this was one of the key messages we heard from the general public and representative groups when we conducted our own ‘ listening exercises ’ as part of the ecb ’ s 2021 strategy review. to the extent that monetary policy has significant redistributive effects, it will of course impact inequality, at least in the short term. but an equally – if not more – important issue is how inequality can also impact monetary policy. in other words, how pre - existing levels of inequality – either in income and / or wealth – impact how monetary policy is transmitted to households, firms and overall economic activity. there has been an explosion of research on this issue in recent years. 10 much of it focuses on the how monetary policy changes – for example, increasing or decreasing interest rates, or purchasing assets – affects different types of households according to income, job - type or wealth. when i talk about ‘ conventional ’ monetary policy, if there are more households in society whose consumption is very sensitive to income changes – typically those with limited access to credit, or fewer savings – then the transmission of monetary policy to the real economy tends to be stronger. our recent central bank quarterly bulletin article on “ household economic resilience ”, emphasised this issue by quantifying for the first time the joint distribution

consideration of the risks of these firms in times of stress must also be assessed. challenges for cross - border regulation given the macroeconomic and financial stability considerations outlined above, i will now turn to some of the challenges for cross - border regulation going forward. in recent weeks the uk released the white paper on brexit. the central message was clear, namely that the priority for the uk is to regain sovereignty over immigration policy and have control over its own laws. however, many issues have yet to be addressed. when the uk leaves the eu, they leave the jurisdiction of the european court of justice which presents many potential challenges. these challenges are complicated by the fact that issues differ from sector - to - sector and with regard to the specific legislative or regulatory requirements concerned. the relevant legislation will vary depending on firm type and activities involved. what is important is that regulatory authorities ensure that any migration of firms does not lead to a more fragmented or disjointed supervisory system. regardless of where an entity seeks to relocate, firms should expect a rigorous assessment of the applicable regulatory standards and intrusive ongoing supervision of their activities. regulatory authorities operate as part of the european system of financial supervision ( esfs ) and, as such, should apply european legislative requirements in a uniform manner. this is a decentralised, multi - layered system of micro - and macro - prudential authorities, separated according to the respective sectoral area – banking, insurance and securities markets. the objective of the esfs is to ensure consistent and coherent financial supervision and the effective implementation of the rules in the financial sector. it also aims at preserving financial stability, promoting confidence in the financial system as a whole, and providing sufficient protection for consumers. this commonality of approach is critical to ensure that there will be no ‘ race to the bottom ’ for firm ’ s location decisions ; that the risk of regulatory arbitrage is mitigated ; and that any of the financial stability risks i mentioned earlier which could arise as a result of a diminution of regulatory standards are avoided. in some cases, new firms will be similar to those already operating in the relevant jurisdictions. 4 / 6 bis central bankers'speeches in others, these will be new firm types, new business models or new pieces of market infrastructure. therefore, brexit has the potential to significantly change the financial services landscape in some jurisdictions as certain activities, which have historically taken place in london, relocate to ensure access to the single market. for banks