9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Innovations in retail payments can transform checkout and ecommerce platforms can open new financing to SMEs. Innovation in, and greater connectivity across, wholesale payment systems have the potential to cut the costs of doing business across borders and unlock new trading opportunities. Intelligent use of big financial datasets could transform credit markets, closing the gap between financing opportunities available to small companies and those enjoyed by their larger competitors. Given their position at the heart of the financial system, central banks have a crucial role to play in supporting the development of this new finance, not least through creating the new infrastructure that it will require. 32  Monetary Policy’s Role in Managing the Transition As a former central banker, Whitaker would have recognised the importance of maintaining price stability during periods of large structural change. The appropriate setting of monetary policy will be influenced by the structural changes wrought by the Fourth Industrial Revolution, including in the labour market, by its impact on price dynamics and on the equilibrium rate of interest. To be clear, as these structural changes are real in nature, monetary policy cannot prevent them, and it would be unwise to attempt to accelerate them. For example, running the economy hotter is unlikely to be effective at increasing the rate at which workers displaced by technology can find new roles because it does not address the underlying frictions, particularly the lack of suitable skills.

The Fourth Industrial Revolution could differ from its three predecessors in terms of scope, scale and speed. Scope Thus far, each wave of technological change has increased the importance of cognitive tasks relative to noncognitive ones. In other words, machines have largely substituted for human hands not heads. Workers have been able to improve their skills and take on newly created sets of cognitive, higher value tasks – tasks beyond the cognitive limits of machines. Rapid improvements in computing power, the increased availability of big data and advances in artificial intelligence and machine learning mean smarter machines are already replacing a broader range of human activities than before, reaching well into the range of “heads”. New technologies may increasingly provide intelligence, sensory perception, and reasoning which previously only labour could provide. Technological optimists  10  believe future automation will move beyond substituting for the ‘routine-manual’ human tasks th  technology performed in the late 20 century to almost the entire spectrum of work. 11  It may be left to people to provide “hearts” – that is, tasks that require emotional intelligence, originality or social skills such as persuasion or caring for others. And if new forms of bespoke mass creativity are made possible by the new global economy, human “hands” may once again take over (a form of cottage industry going full circle). 12  One thing that could be different is the effects of demographics. An ageing population  will lead to greater demand for care and a straight decrease in labour supply.