measures that allowed the capital controls to work as intended made a big difference in this regard. the economic recovery began once the exchange rate had been stabilised and the inevitable adjustment of domestic demand to a new economic reality was more or less complete. the economy gained resilience through the underlying strength of the sectors that had not been part of the bubble economy — conventional export sectors in particular. firms in the tradable sector took advantage of the low real exchange rate. the economic upswing began in q2 / 2010, when gdp began to grow once again. gdp has grown more or less without interruption since, and in terms of gdp per capita this is iceland ’ s longest economic upswing since the end of world war ii. early on, growth was weak in comparison with previous upswings, as it was driven mainly by closing the slack in the economy, as investment was relatively weak at the outset. that changed in 2015, when tourism began to grow at an unprecedented pace, terms of trade improved, and investment picked up. that year the output slack closed and a positive output gap opened up, and sustained growth without economic overheating called for increased labour importation. in recent years, icelanders income has risen above its pre - crisis peak, owing both to gdp growth and to the improvement in terms of trade. real wages were 24 % higher in 2018 than in 2007, and real per capita income was 12 % higher. according to international statistics, iceland ranked 11th in the oecd in terms of per capita income in 2007. we dropped to 19th place in 2010, but by 2017 we were up to sixth place. i always expected that the economy would recover, but i dared not dream that we would get to where we are today. as i mentioned in my speech at the 2010 annual meeting, i was also worried that the endemic imbalances in the icelandic economy would surface again once the economic recovery was further advanced. this could manifest itself in economic instability, an unsustainable external position, and above - target inflation. fortunately, that did not happen. we have experienced a long, sustained period of growth. certainly, a positive output gap could have ended in overheating and instability. but we managed to avoid this with imported labour and prudent economic policies, particularly monetary policy. now the output gap is narrowing quickly, but without yet giving way to an economic contraction. in the future, considerable effort will probably be spent on seeking explanations for this success.

importance for domestic retail payment intermediation during the financial crisis in autumn 2008 was that the icelandic authorities could take control of domestic payment intermediation and guarantee continued functioning without external involvement. in view of the changes currently taking place in domestic retail payment intermediation, it is no longer a given that the authorities will be able to respond in the same way. it is therefore appropriate to ponder how best to ensure continued functioning of electronic payment intermediation if an unexpected incident or shock should occur. to an increasing degree, domestic electronic payment intermediation is viewed as an element in national security — that the authorities must guarantee, directly or indirectly, that there will always be a domestic payment channel independent of foreign entities. the existence of alternate routes that can be used if the main systems malfunction enhances the security of retail payment intermediation. physical cash in the form of banknotes and coin plays the same role. but it is consistent with the requirements of our time that there must also be electronic payment routes that are independent of foreign card systems ’ core infrastructure. elsewhere in the nordic countries, such independent electronic solutions have been in place for some time. a comparable technological solution is now ready in iceland — a payment solution based on domestic financial institutions ’ core infrastructure — but it has not yet been put into general use. this is not acceptable, given the possibility that this solution will improve security and enhance efficacy and efficiency for the benefit of icelandic society. bills of legislation providing for the merger of the central bank and the financial supervisory authority have been introduced before parliament. this is a large and complex project that i do not have time to discuss at length here. in important ways, the changes provided for in the bills are major improvements. chief among them is the fact that they make monitoring financial stability more effective and efficient, and they allow for better harmonised formulation of monetary, financial stability, and financial supervision policies. in addition, it is ensured that the central bank, as lender of last resort, will have a good enough overview to take the best decisions possible when the need is greatest. the experience of the financial crisis has taught us that this is important. in closing, i would like to thank the supervisory board and the monetary policy committee for their collaboration, and i wish to thank the central bank ’ s many colleagues and collaborators for their cooperation – not least the prime minister ’ s office, the ministry of finance and economic affairs, and the financial supervisory authority. i would also like to thank