Unfortunately, the Bank has not been able to follow up sufficiently with presentations and discussions, but the aim is to do that in the near future, including with the establishment of a so-called Payment Council, a forum for dissemination of information and exchange of opinions among key stakeholders. The Council’s first meeting is planned for next month. In many respects, electronic retail payment intermediation has been effective and secure in Iceland, in part because it has been based largely on Icelandic core infrastructure and real-time settlement. Internationally, real-time settlement is a widespread goal, and it is therefore important that we do not backtrack on that point. One of the factors that was of vital importance for domestic retail payment intermediation during the financial crisis in autumn 2008 was that the Icelandic authorities could take control of domestic payment intermediation and guarantee continued functioning without external involvement. In view of the changes currently taking place in domestic retail payment intermediation, it is no longer a given that the authorities will be able to respond in the same way. It is therefore appropriate to ponder how best to ensure continued functioning of electronic payment intermediation if an unexpected incident or shock should occur. To an increasing degree, domestic electronic payment intermediation is viewed as an 7  element in national security — that the authorities must guarantee, directly or indirectly, that there will always be a domestic payment channel independent of foreign entities.
We must not forget, either, that financial crises of the magnitude of the one in Iceland cast long shadows, and many have faced hardship for a long time afterwards. This underscores the necessity of safeguarding financial stability. The Central Bank’s contribution to this successful outcome is threefold: formulation and implementation of monetary policy; participation in the resurrection of the financial system and the formulation and implementation of financial stability policy; and participation in the development of the capital account liberalisation strategy and the execution of the strategy. I will now turn to these three factors and, as I do so, move to the present day. Inflation subsided in 2009 and 2010 as the inflationary impact of the steep drop in the exchange rate in 2008 tapered off and the exchange rate stabilised in H2/2009 and then began to rise in 2010. Inflation declined steadily until it fell to target in late 2010. As inflation eased, Central Bank interest rates were cut, reaching a low of 3½% early in 2011. Inflation expectations remained above the target, however. In H2/2011 and 2012, inflation rose again following the depreciation of the króna and large contractual wage increases. We know now that monetary policy achieved good results in its response to this situation. The response consisted of interest rate hikes and signalling of further ones to come, but also of more active use of other policy instruments such as foreign exchange market intervention and, later, the special reserve requirement on capital inflows into the bond market and high-yielding deposits.