fabio panetta : at the edge of tomorrow - preparing the future of european retail payments introductory remarks by mr fabio panetta, member of the executive board of the european central bank, at the 14th payment forum of suomen pankki − finlands bank, helsinki, 19 may 2021. * * * thank you for inviting me to speak at this fourteenth edition of the payments forum organised by suomen pankki – finlands bank. finland is often seen as a forerunner in the development of retail payments, certainly when it comes to digitalisation and its effects. and i am pleased that despite the ongoing pandemic, we have come together as stakeholders of the payments ecosystem. today, i would like to discuss how we can promote digital, european, instant retail payment solutions that can be used by everyone, everywhere. digital digitalisation has indisputably come a long way in reshaping the european retail payments landscape. 1 so it is natural for digitalisation to be one of the starting points of our retail payments strategy. 2 simply put, digitalisation is changing the way we pay. we are increasingly paying online and with cards. the pandemic has further accelerated this trend. 3 in facing these developments, europe is not optimally positioned, not least because of the “ waitand - see ” attitude that has in some cases prevailed in the past. this has made europe overly dependent on a few foreign providers for card and online payments, resulting in a high degree of market concentration. 4 european to increase choice, resilience and competitiveness, the european payments ecosystem must proactively stimulate competition, including by developing innovative, europe - grown payment solutions and technologies. for this reason, a key priority of our retail payments strategy is the development of a european payment solution for the point of interaction. 5 the ecb welcomed the launch of the european payments initiative6 as its objectives meet our public interest criteria : pan - european reach and customer experience, convenience and cost efficiency, safety and efficiency, european brand and governance, and global acceptance as a longer - term goal. we remain open to other market initiatives, provided they meet these requirements. instant another key priority of our retail payments strategy is the full deployment of instant payments. here, too, the industry has a decisive role to play, facilitated or guided by the authorities. on the operational side, the eurosystem has taken steps to ensure the pan - european reach of instant payments by the end of 2021 through our target instant payments

centers. these shifts in demand happened much more rapidly than the response in housing supply. as a result, rents increased quite significantly. we have not seen a decline in housing services inflation, but there are indications that we soon will. to see this, consider figure 5. because rental agreements tend to be renewed infrequently ( often only once a year ), average rents ( the black line ), which is what the pce price index measures, tend to lag market rents ( the green, blue, and red lines ), the rent i would pay if i were to sign a new lease as a new tenant. for this reason, market rents are a leading indicator of how overall rents and housing services prices are likely to change over the next 6 to 12 months. market rents are now increasing much more slowly than over 2021 and much of 2022, suggesting that housing services inflation will eventually slow. lastly, inflation in other core services, the red line back in figure 3, is a large category that covers activities as varied as travel and recreation, and medical and legal services. inflation for these services has remained stubbornly high. as other governors and i have noted in the past, an important source of inflation pressures in this category has likely been the shortage of workers, which has pushed up labor costs at rates above those consistent with 2 percent inflation. the inflation outlook for this nonhousing category of core services partly depends on whether growth in nominal labor costs comes back down, and recent data suggest that labor compensation has indeed started to decelerate somewhat over the past year. although i have focused on core inflation because it is more useful for assessing trends in inflation, we also closely follow food and energy prices given that our target is for total inflation and that food and energy prices are very important for many households. both food and energy inflation rose sharply following the russian invasion of ukraine. but more recently, food inflation has slowed somewhat, as global food prices have retraced some of their earlier increases, while energy prices have fallen noticeably. because energy prices are shaped primarily by global developments and not by u. s. monetary policy, there is a lot of uncertainty about the future course of energy inflation. in summary, core goods inflation has started to come down. several indicators suggest that housing services inflation is likely to come down in the coming months. there is more uncertainty surrounding inflation in core services excluding housing. over time, we ’ ll learn more about inflation dynamics in this sector. benefits