In the wake of the coronavirus pandemic, the euro area financial system has faced an economic shock of global breadth and of enormous scale and speed. Policy measures 3/4  BIS central bankers' speeches  have so far helped prevent a health crisis turning into a systemic financial crisis, but mediumterm risks to financial stability have increased markedly.
Rigidities in price and wage-setting mechanisms or ongoing excessive price and wage developments may delay the necessary adjustments of relative prices to economic shocks and give rise to a prolonged period of relatively high inflation in some countries.