The current account surplus is projected at 2% of GDP by the end of the forecast horizon and could easily be eroded by a surge in demand and/or lower export revenues. 2  Chart 1  As Chart 2 shows, both private consumption growth and rising house prices are due mainly to increased real incomes and households’ improved financial position. This differs greatly from the situation in pre-crisis Iceland, where increased household leverage played a leading role, but as can be seen in the chart on the right, lending to households has not increased in real terms since 2012. Chart 2  The fact that inflation has been low in recent years despite steep rises in wages and house prices stems primarily from two things: on the one hand, positive supply shocks in the form of strong export growth and improved terms of trade, which have pushed the exchange rate of the króna upwards, and on the other hand, price deflation in international goods trade. Import prices have therefore fallen steeply in krónur terms, as can be seen at the left in Chart 3. What would happen when this imported deflation turned around was always a source of concern. Such a development now appears to be on the horizon, as can be seen in the chart. But fortunately, the rise in unit labour costs seems to be losing pace, as can be seen in the chart at the centre, and house prices appear to have 3  peaked.
Unprecedented demand, especially from developing countries, requires a rapid transition to secure and inclusive digital finance.1 The study points to a double digit increase in number and volume of fintech transactions, as well as  1/4  BIS - Central bankers' speeches  continuous increase of the client base. These trends have been underpinned by changes to the existing fintech products and launch of new ones. About 60% of the surveyed fintech companies reported launching new products as a response to changing behavior and demand of clients amidst pandemics. In addition, the fact that in the last decade banking industry was dealing with the legacy issues of the global financial crisis also provided bigger space for fintech firms, as non- regulated entities, to penetrate in financial business with consumer-centric solutions. This process was facilitated by the more favorable regulatory environment, i. e., falling regulatory barriers to entry for newcomers. Concerning the benefits, I think there is no doubt that Fintech can bring enormous benefits for customers, the financial system, and the overall economy. By enabling new players and business models to enter the market, Fintech has potential to increase competition, meet unfulfilled customer needs, reduce inefficiencies and transform financial services for good. These solutions come from Fintech's ability to unbundle traditional banking services such payments, maturity transformation, and risk sharing from banks, allowing these services to be performed by non-banks, i.e., fintech firms. Furthermore, fintech solutions can enhance data analysis, leading to more personalized products.