are likely to come onto the market in the months ahead due to the large volume of mortgage loans currently in the foreclosure process. for the government sector, large federal budget deficits are a constraint and fiscal policy is slowly shifting from an expansive policy back toward restraint. at the state and local level, the constraints are even more binding, as budgetary gaps will need to be addressed by spending cuts and tax increases ( chart 22 ). exports rebounded sharply over the second half of 2009, particularly to the emerging world ( chart 23 ). however, domestic demand in europe and japan – important export markets for the united states – remains very weak. this suggests that the u. s. trade balance is likely to change little over the next year or two, and, thus, will be relatively neutral in terms of its impact on growth. only business fixed investment is in a position to be a true locomotive of growth. profits have stayed high relative to investment, and corporate balance sheets are awash with cash ( charts 24 and 25 ). however, even here, the growth impulse is likely to be weak. prospective startup businesses are going to find it difficult to obtain funding. and larger businesses will unlikely increase investment spending sharply at a time when capacity utilization rates remain unusually depressed ( chart 26 ). relatively sluggish growth implies that the output gap will be closed very gradually. this suggests that inflation pressures will stay subdued. the excess supply of housing is putting downward pressure on rents, which represent a large share of the consumer price index ( cpi ) ( chart 27 ). in addition, unit labor costs have declined sharply over the past year due to the combination of unusually rapid productivity growth and slowing labor compensation growth ( chart 28 ). fortunately, longer term inflation expectations remain well anchored. these expectations have not declined and are broadly consistent with my views on the appropriate inflation goal ( chart 29 ). this is actually a welcome development right now because it will likely help to keep the trend inflation rate from falling too much. lessons to be learned we have just lived through a period in which rapid increases in asset prices led to a serious misallocation of resources and a severe financial crisis. what do we need to do to minimize the likelihood of avoiding this type of experience in the future? as i noted in a recent speech, we face three major challenges that will determine how smooth this economic expansion turns out to be. 5 first, we need regulatory reform that makes our financial system more stable and resilient

##isation in payments? and what should or must the industry do to foster innovation and to keep pace in the digital future? i would like to mention two key concepts here : updating existing payment systems, for example via instant payments, and central bank digital currency ( cbdc ), specifically the project on a digital euro. nowadays, most people do not wait for the morning newspaper to be delivered in order to inform themselves – that is, if they have still subscribed to one. neither do they wait for the 8 or 9 o'clock television news. instead they receive information in almost realtime via the internet. while news and media are available instantly, according to current legislation sepa payments must be credited to the recipient's account within one working day at the latest. a big step towards faster payment execution was the establishment of the sepa instant credit transfer rulebook by the european payments council in a joint effort of the european payments industry. and central banks in the euro area launched the target instant payment settlement system – tips for short – in 2018. tips ensures the reachability of almost all institutions in payments throughout europe. to further facilitate the usage of instant payments in the market and to make instant payments the new normal, the european commission is currently developing a regulation which is due to be presented by the end of this year. here in spain, the bizum solution shows how great the potential is. it seems that more than 40 % of all credit transfers in spain are already instant. and statistics show that instant payments are not only substituting traditional credit transfers, but have also generated new volumes and new business cases. according to the ecb blue book, around 400 million additional credit transfers were processed in spain. instant payments are also suitable for new payment solutions with pan - european reach. we would benefit from a cashless european solution that works from the cabo de sao vicente in portugal to buy the famous " last bratwurst before america " to saariselka in the north of finland to pay for a snowmobile safari through lapland. thanks to european governance, a pan - european solution based on instant payments could be the basis for strategically important alternatives to the payment offerings of international bigtech firms and card schemes. for european banks, meanwhile, bank account - based 3 / 6 bis - central bankers'speeches payment solutions using instant payments offer an opportunity not to lose access to the customer side in payments. 4 new means of payment but beyond the development of instant payments and in