2020. world economic outlook : a long and difficult ascent. october 2020. 20 statista market insights. 21 international monetary fund ( imf ). 2020. global financial stability report. october. 22 beck, t., cecchetti, s. g., grothe, m., kemp, m., pelizzon, l., & serrano, a. s. 2022. will video kill the radio star? digitalisation and the future of banking. european systemic risk board. 23 pengpeng, y., korkmaz, a., zhichao, a. and haigang z. 2022. the rise of digital finance : financial inclusion or debt trap? finance research letters. 47 ( part a ). third, there is evidence to suggest that the buy - now - pay - later and credit card - based spending can facilitate immediate consumption, especially for younger generations and lower their savings. 24 fourth, there can be concerns of mis - selling of financial services to households due to poor digital financial literacy. 25 these shifts in consumer behaviour may require central banks and policymakers to transition from traditional macroeconomic models to agent - based modelling, integration of behavioural economics, nowcasting, policy simulations and advanced liquidity stress tests. they also need to equip themselves with cutting - edge computational tools like machine learning and big data analytics to examine the real - time, highfrequency data received from digital platforms. v. conclusion as we journey towards new frontiers of economic research, i am reminded of the words of john maynard keynes : " the difficulty lies not so much in developing new ideas as in escaping from old ones ”. economic research is like exploring a dense forest : each new finding clears a path, but also reveals deeper mysteries. as we prepare, like the 24 cornelli, g., gambacorta, l. and pancotta, l. 2023. buy now, pay later : a cross country analysis. bis quarterly review, december 4, 2023. 25 morgan, p., huang, b. and trinh, long. 2019. the need to promote digital financial literacy for the digital age. policy brief under t20 japan task force 7. march 31, 2019. starship enterprise, in the famous sci - fi television series star trek, to boldly go where no man has gone before, i am reminded of the words of t. s.

rising food prices. in other words : inflation leaves the zone of “ rational inattention ” and snaps into the focus of attention. when prices soar across the board, households and firms will adjust their behaviour. [ 4 ] workers will push harder to regain their lost purchasing power, demanding higher wages. firms will try to compensate for lost profit margins by raising prices. typically, contract terms will then become shorter and price adjustments more frequent. however, if inflation expectations were to follow experienced inflation, households and firms would additionally seek compensation for expected future losses as well. claudio borio of the bank for international settlements ( bis ( bank of international settlement ) ) put it this way : “ [ inflation ] becomes a more relevant focal point and coordinating device for the decisions of economic agents. ” [ 5 ] that is one reason why the bis ( bank of international settlement ) warns that the transition from low - to high - inflation regimes can be self - reinforcing. once a high - inflation regime has become established, the way back would be very costly. monetary policy would then have to act more aggressively to break the new patterns and restore its own credibility. this makes it all the more important to prevent high inflation and new patterns of behaviour from becoming entrenched. 3 scarring effects of personal experiences i am confident that monetary policy in the euro area will succeed in healing the gaping inflation wound by reaching its medium - term target. but “ scars ” may remain. or in more technical terms : because of experience - based learning, high inflation may have long - term effects. and that has consequences, as the growing body of work by ulrike malmendier and others suggests. people use personal past experience to form their inflation expectations. let me illustrate this with the results of a study that used german reunification as a natural experiment : east germans expect higher inflation than west germans – even decades after reunification. the differences seem to be due to the persistent effect of the inflation shock after reunification. for people in east germany, it contrasted strongly with the norm of zero inflation in the communist era, while west germans were used to moderate price increases. analyses for the us ( united states ) point in the same direction : for example, older generations had already experienced high rates of inflation in the 1970s and early 1980s. and indeed, the over - 60s have had persistently higher inflation expectations over the past decade. if high levels of inflation persist, experience - based learning predicts that expectations of younger cohorts