speeches the global economy has probably already regained its pre - pandemic level of output. in fact, the global economy could potentially surprise on the upside. one, vaccination rates are rising in many advanced economies, allowing them to re - open earlier and more fully. some of them may effectively suppress domestic transmission by the end of q3 2021. two, even if there are mobility restrictions on account of new outbreaks of the virus, businesses and households have become better at adapting to such restrictions. a review of the evidence by mas 6 has found that economic activity has become less responsive to movement restrictions over time. three, the ebbing of the pandemic could lead to a bigger surge in business and household spending than currently expected, reflecting pent - up demand. a third feature of the global economic recovery is that downside risks remain significant. the main downside risk is the emergence of more infectious or lethal virus mutations. even if most countries can vaccinate their populations and significantly reduce the incidence of the virus, continued spread in the remaining countries may offer a rich environment for the emergence of new virus variants. if a variant emerges that proves resilient to the vaccine, the world is at risk of sliding back into widespread lockdowns, with their associated impact on economic activity. no country is safe until all countries are safe. another source of downside risk is a sharp pick - up in inflation in the us. us consumer price inflation reached a stronger than expected 5 % year - on - year in may, the highest rate since 2008. the rise in inflation reflects transitory factors to a significant degree, especially base effects from last year. us policymakers expect inflation to ease by the end of this year. the rapid pace of economic recovery in the us has, however, tilted the balance of risks towards a pronounced and persistent rise in prices. if the pandemic has caused some scarring of the economy, there may not be much spare capacity to absorb the sharp pick - up in demand. signs that the inflation momentum was becoming too strong could force the federal reserve to withdraw policy accommodation sooner than currently indicated or expected. markets might then react by driving up long - term interest rates. the premature tightening of financial conditions could then trigger increased volatility in financial markets, especially in economies that have yet to emerge from the pandemic and those with higher fiscal or external funding needs. in sum, while the global economy is in a much better place compared to last

##vid world might look like. i think it is a bit too early to tell, but some broad trends are discernible. first, the financial sector needs to be able to operate effectively with safe management. it is going to take quite a while before we find a vaccine or treatment for covid - 19. this means the virus is going to be with us for a while and, with it, the risk of renewed outbreaks of infections. 2 / 3 bis central bankers'speeches so, the financial industry must prepare itself to operate in a safe manner, amid the ongoing risk of pandemic. this could include changes in office layouts, the way transactions are carried out, everything we do has to take into account public health considerations. second, and an obvious one, is digitalisation. there has been more digitalisation in the last two months than people had expected to see over the next five years. this acceleration is going to be with us. once people have gotten used to live digitally – remote working, e - commerce, telemedicine – the economy and society are going to change in a variety of ways. the financial sector is well - plugged into digitalisation. those financial institutions that adopt deeper end - to - end digitalisation, who are able to use digital platforms for their business operations that today are conducted in person or on paper, are going to have a strong competitive advantage. new opportunities in particular areas of financial services are harder to tell. impact investing may become a stronger growth opportunity. we have already seen some financial institutions launching impact funds to seek higher returns by investing in companies which are focused on combating the pandemic or providing solutions to deal with the associated health risks. healthcare and supply chain resilience have taken on added importance, and there seems to be interest among asset managers to invest in these areas. pandemic risk insurance is another area that might see good growth. there is now a much heightened awareness of pandemic risks. although pandemic risk insurance has been around for some time, it never really took off. i think you are going to find demand for risk management and insurance solutions to address some of these pandemic - related areas of risk. the financial sector is fundamentally in the business of risk management. covid - 19 represents the materialisation of an extreme kind of risk. to the extent there is greater recognition of risks of all kinds and consequent demand for effective risk management solutions, the financial sector