, the euro retail payments board ( erpb ), which is the multi - stakeholder group helping to foster the development of an integrated, innovative and competitive market for retail payments in euro in the european union, identified a need for at least one pan - european instant payment solution for euro that is open to any payment service provider in the european union. for me, it seems logical that such a solution would be based on iso 20022, iban and immediate payment finality. in short, sepa credit transfer looks like the most suitable basis for an instant payment scheme. i expect that the erpb will take a clear stance on the way ahead at its meeting this month. i also expect that the industry and, more specifically, the european payments council ( epc ), representing payment service providers, will carry out its work accordingly. time is of the essence here. the sepa project showed that the harmonisation of retail payments in europe can be a time - consuming process. innovation, however, often moves at high speed. we cannot afford to take a wait - and - see approach. at present, innovative payment methods are being implemented by some national communities in europe. many of those methods offer instant payments, which are cleared immediately. however, although they are often based on the same standards, the implementation of those standards is not harmonised and thus the methods are not easily interoperable. on top of that, many euro area constituencies are facing a dilemma because they do not know whether to wait for a pan - european scheme or to develop a national scheme themselves. i think that rather than starting to develop national schemes, we should go straight to a paneuropean solution for instant payments. we should take advantage of the harmonisation and integration already achieved with sepa and use sepa as a blueprint for instant payment solutions. as i said, instant payments are the “ hot ” topic in the retail payments industry. yet they will be largely invisible to end users. they will form the basis on which payment service providers build their offerings for end users, aiming to fulfil those users ’ expectations with regard to convenience and safety. the british futurologist dr ian pearson predicts that by 2025 people will be able to spend their money electronically anywhere without worrying about what kind of devices or apps they have. however, he also believes that even in 2025 coins and notes will still be useful for certain purposes and will stay in common use. see the report commissioned

history tells us destabilizing inflationary pressures eventually emerge. for a considerable portion of the nineteenth and early twentieth centuries, inflationary credit excesses and prices were contained by a gold standard and balanced budgets. both, however, were deemed too constraining to the achievement of wider social goals as well as for other reasons, and instead the federal reserve was given the mandate of maintaining the appropriate degree of liquidity in the system. over the long haul, the economy ’ s growth is effectively limited to the expansion of capacity based on productivity and labor force growth. to be sure, it is often difficult to judge whether observed growth is soundly based on productivity or arises from transitory surges in output financed in many cases by excess credit, but this is in part what making monetary policy is all about. in that regard and in the current context, how can we be confident we at the federal reserve are not inhibiting the nation reaching its full growth potential? one way is to examine closely the recent economic record. only two and a half years ago, rising commodity prices, lengthening delivery times, and heavy overtime indicated that our productive facilities were under some strain to meet demand. to be sure, since early 1995, those pressures have eased off. however, given the good pace of economic expansion since then, it would stretch credulity to believe that capacity growth has accelerated at a sufficient pace to produce a large degree of slack at this moment. capacity utilization in industry is a little below its level through much of 1994, and pressures in product markets have remained tame. however, falling unemployment rates and rising overtime hours - - as well as anecdotal reports - - unambiguously point to growing tightness in labor markets. with tight labor markets and little slack in product markets, we are led to conclude that significant persistent strength in the growth of nominal demand for goods and services, outstripping the likely rate of increase in capacity, will presumably be resisted by higher market interest rates. if, instead, that demand is accommodated for a time by a step up in credit expansion facilitated by monetary policy, increasing pressures on productive resources would sow, as they have in the past, the seeds of even higher interest rates and a consequent subsequent economic retrenchment. this, then, was the context for our recent action. we saw a significant risk that monetary policy was not positioned to promote sustainable economic expansion, and we took a small step to increase the odds that