currently see economic activity remaining subdued in the near term before gradually recovering over the course of the year. consumer spending should strengthen as real disposable income continues to recover. employment continued to grow in the final quarter of 2023, driven mainly by an increase in the labour force. in february the unemployment rate remained at 6. 5 %, its lowest level since the introduction of the euro. barring further shocks, exports are also expected to recover amid improving global demand and a gradual rebalancing of consumption from services back to goods. however, risks to our growth outlook remain elevated and tilted to the downside. in particular, geopolitical risks pose a threat to the world economy. if these risks were to materialise, specifically in the light of tensions in the middle east, major trading routes could be blocked and global supply - side bottlenecks could worsen. a further slowdown in global trade would ultimately also weigh on euro area growth. financial stability weaker growth could pose challenges to the overall positive outlook for financial stability in the euro area, while rising geopolitical risks and policy uncertainty could raise the likelihood of tail events. we assess the outlook as fragile. while risk pricing in financial markets has generally been characterised by low volatility, market sentiment 2 / 3 bis - central bankers'speeches remains vulnerable to sudden shifts in response to negative surprises. structurally low liquidity buffers combined with high leverage in segments of the non - bank financial sector could further amplify any market correction. real estate markets have remained in focus. while residential real estate markets have seen an orderly cooling, commercial real estate markets have faced more challenges a€ “ as tighter financing costs, a move towards hybrid working practices, e - commerce and environmental, social and governance requirements are likely to continue to put pressure notably on the office and retail segments. mild signs of asset quality deterioration are becoming visible in commercial real estate ( cre ) lending. that said, banks'exposures are broadly contained. the same cannot be said for parts of the nonbank financial sector, which are less transparent and subject to lighter regulation. but all in all, the euro area financial system has remained strong, supported by declining inflation. firms and households have shown resilience in the face of rising debt servicing costs resulting from higher interest rates. banks have maintained sound liquidity and capital buffers, while non - performing loan ratios remain close to historically low levels. monetary policy the ecb governing council has responded forcefully to

begun and i hope that progress will soon be made in this regard. of course, the sepa project is by no means complete. other topics, which are currently being worked on in the banking industry, include future payment instruments, such as the sepa direct debit 5 and an additional european card scheme. the european payments council ( epc ), in collaboration with the eurosystem and european commission, is currently looking into different ways of ensuring that the new services are ultimately at least as good as the current ones and that they meet customers ’ requirements. for example, all direct debits will have to be changed so that they comply with the new payment services directive, which will have been transposed by the end of november 2009. 6 in terms of cards, the eurosystem is contributing to the clarification of the economic and political rationale for an additional european card scheme, and is identifying practical steps that could be taken in this direction. i expect that the details on the sepa products and the migration times will soon become clearer, and that stakeholders will become more actively involved in the sepa debate. indeed, i have been informed that some forward - looking corporates have already started to prepare themselves for sepa credit transfers. they have started to introduce the new sepa standards, have improved their connectivity with banks – and all this in the light of a more competitive service ( and more competitive pricing behaviour ). with regard to direct debits, the eurosystem is encouraging the migration of existing mandates towards the new sepa direct debit scheme, and we are facilitating discussion between competition authorities and the banking industry in order to clarify the features of this scheme. directive 2007 / 64 / ec of the european parliament and of the council of 13 november 2007 on payment services in the internal market amending directives 97 / 7 / ec, 2002 / 65 / ec, 2005 / 60 / ec and 2006 / 48 / ec and repealing directive 97 / 5 / ec ( text with eea relevance ). the role of corporates over the next few years finally, i would like to turn to innovation and the role of the corporates over the next few years. in general, innovation occurs on different levels. it could lead to • improved goods and services ( such as sepa instruments ) ; • improved organisational processes ( such as supply chain innovation ) ; • improved production processes ( such as specialised payment factories or outsourcing ). regarding the first level of