have a more permanent impact on inflation. effects of supply - side shocks may, however, be more permanent. an improvement in trend productivity, for example, implies lower resource utilisation and thereby lower underlying inflation, and vice versa. such supply shocks should therefore influence the construction of monetary policy. [UNK] advantages and drawbacks of the cpi a drawback with the cpi is that it combines information about both the underlying trend and temporary price movements. so why has the riksbank chosen the cpi as its target variable instead of some indicator of underlying inflation? the reason lies in the cpi ’ s advantages as a familiar index that is used in many contexts, whereas the opposite applies to the concept of underlying inflation. sweden could, in fact, supplement the cpi figures with a series on underlying inflation statistics that would ultimately become more familiar. this is a matter that the cpi enquiry will be considering. but it is still not clear just how an index of underlying inflation should be constructed. what is clear, however, is that this function cannot be performed by the net price index because that excludes only one type of transitory effect, namely indirect taxes. in that it includes other transitory effects - for example mortgage interest costs and international oil price movements - the net price index gives a picture of inflation ’ s underlying trend that is incomplete and distorted. another alternative would be to use the eu ’ s harmonised index of consumer prices ( hicp ), which is constructed to exclude house mortgage interest costs. one disadvantage of this index, however, is that some of its components have not yet been finalised. as an aid in the analysis of price trends, the riksbank ’ s inflation reports include various indicators of underlying inflation. the tolerance interval of ±1 percentage point serves, among other things, to accommodate the various transitory price movements that normally occur. experience has shown, however, that in periods when the transitory price effects are extensive, inflation may move outside the interval without this by itself having consequences that should be considered in monetary policy. thus, the tolerance interval represents the range that is normally expected for fluctuations in cpi inflation. it serves to indicate that the target variable, the cpi, cannot be controlled exactly. still, i am convinced that people ’ s awareness and understanding of these factors will gradually grow as time passes. this will happen not least as a result of the efforts of all those knowledgeable analysts and business journalists who follow monetary policy closely and mostly do their utmost to explain these

30. 08. 2022 central bank money for the digital age : reflections on the new paradigm keynote address / central bank research association ( cebra ) annual meeting margarita delgado deputy governor it is with great pleasure that i take up the opportunity of addressing such a distinguished audience tonight with a topic that i very much feel falls within cebra ’ s remit. in that respect, given the turbulent times we are living in, leveraging a space where an open and constructive dialogue between us and the academia can take place is sure to prove even more instrumental now than it has been the case in the past. yet, over and above the daunting challenges of inflation, climate change, macroeconomic stability and many others which you are touching upon in this year ’ s conference programme, in the next few minutes i would like to turn my attention on to something very different. i am talking about the so - called central bank digital currencies, one of the most prominent examples of financial innovation. being digital is no longer a prophecy awaiting realization as nicholas negroponte 1 once forecasted in his now renowned examination of the frontiers of digital technology and its effects on the future of our society. instead, it has already become an all - encompassing phenomenon which the pandemic helped expedite by a few decades. being digital in the financial industry means new opportunities for incumbents to acquire new clients, to expand their current share of the wallet and to obtain efficiencies unheard of. nonetheless growing digitalization also entails the emergence of new competitors and value propositions that will likely erode their status quo in the industry. technology certainly holds a significant transformational power enabling promising developments but, per se, technology is by no means the ultimate answer to existing risks in economics and finance, as my colleague sir jon cunliffe recently pointed out 2. against this light, it makes more sense for central banks to consider the need for a speedy action. this action need to be based on the exploration of a wide set of tools that help to ensure the safeguarding of financial stability as well as the preservation of the critical role of money in the economy. while many responses are indeed possible, there ’ s no denying that introducing a new form of public money appears to be gaining traction, at least from a more conceptual point of view. in fact, one of the reasons why we, at the eurosystem, are looking into cbdcs in depth is to evaluate their potential to ensure easy