. 2 percent, deposits by 8. 8 percent, loan portfolio by 2. 6 percent, and net profit by 35. 0 percent. moreover, non - performing loans remain manageable, capitalization stays above the regulatory requirement, and liquidity is ample. following the government ’ s recent shift in strategy to contain covid - 19 — from imposing widearea lockdowns to granular quarantines — there has been a substantial improvement in the country ’ s covid situation. 1 / 4 bis central bankers'speeches daily confirmed cases stood at 1, 297 last november 18, significantly down from the peak of 26, 303 last september 11. against this backdrop, we expect the economy ’ s recovery to gain more traction. now let me go back to f. i. r. e. first, f for flexibility. the importance of flexibility — the ability to adapt and evolve — has come to fore in efforts to survive and thrive in the crisis. as far as the bsp is concerned, we exhibited flexibility by implementing unorthodox measures to ensure ample liquidity and maintain financial stability at a critical time. we extended short - term loans and remitted dividends in advance to the national government to support its covid - relief measures. we started purchasing government securities in the secondary market. we were also flexible enough to temporarily relax some regulations. the relief afforded to banks encouraged them to help their hard - hit customers as well. for instance, the bsp ’ s move to count loans extended to micro, small, and medium enterprises ( msmes ) as part of banks ’ compliance to the reserve requirement, to lower risk weights for certain msme loans, and to allow staggered booking of loan losses gave incentive for banks to lend. as we recover from the crisis, focus will shift from trying to survive the crisis to navigating the uncertainties of the recovery and post - crisis periods. individuals, organizations, and economies that are able to seize opportunities from the crisis and adapt will be the champions of tomorrow. this is a solid example of flexibility. this brings me to bsp ’ s key agenda : the digital payments transformation roadmap that we launched last year. the roadmap envisions a cash - lite economy where 50 percent of financial transactions are done digitally by 2023. last year, we saw a leap in digital payments to 20 percent of total financial transactions in the country versus only 1 percent in 2013. let me proceed to the next

and at every renewal, the bank ’ s intent has been to target low and stable inflation to ensure that canadians can make their economic decisions without worrying that inflation would erode the value of their money. 2and it has worked. this monetary policy framework has kept both inflation and expectations of future inflation low. longterm inflation expectations in canada declined from 4 % in 1990 to stabilize at 2 % around 1995. 3 although we don ’ t have measures of canadian inflation expectations in the 1970 – 80s, it is likely that they were as high in the 1970s as they were in the united states. there, inflation expectations averaged around 7 % over the mid - 1970s to mid - 1980s ( based on the university of michigan surveys of consumers ). inflation targeting has allowed households and businesses to spend less time and energy on trying to compensate — or find workarounds — for rising consumer and input prices. or put another way, it has allowed workers to bargain for and — expect — wage gains that recognize their skills and experience, not the need to compensate for the erosion of purchasing power. a perfect storm of higher prices this brings me to the humbling topic of where inflation is today, and why we have been surprised by its strength and persistence. inflation pressures have been higher and more tenacious than we expected, largely because the economic conditions of the pandemic were unprecedented. chart 7 says it all. back in january 2021, we projected an uptick in inflation — but we expected it would be transitory, falling back as supply chain disruptions eased quickly. but as you can see, we have revised inflation projections higher in each monetary policy report ( mpr ) since. this is largely due to repeated updates to our view of the strength and persistence of supply chain disruptions. 3 / 5 bis central bankers'speeches in fact, we can now say that we have faced a “ perfect storm ” when it comes to global and domestic inflation. first, the recovery took on a unique characteristic. goods consumption and housing activity quickly rose above pre - pandemic levels. that is, the pandemic generated a sharp shift toward goods consumption ( chart 8 ). this in turn strained and disrupted already weakened global supply chains, which i spoke about in my last speech. this sharp rebound in global demand for goods, along with pandemic - related restrictions and some weather - related events, created the perfect storm. the global supply of goods did not meet rapid growth in demand, causing goods prices to