pretty confident that the type of strong monetary policy response to rising inflation that had been necessary in the past is unlikely to be needed again as long as we are vigilant. while pressures will undoubtedly arise, they should not be as powerful or as widespread as previously. first, the inflation - targeting regime means that the longer inflation has been contained, and the lower are inflationary expectations, the easier it is to keep things that way. second, there have been important changes in wage setting arrangements that have meant that pressure in labour markets does not feed as quickly as previously into wage inflation. the main changes have been the decentralisation via enterprise bargaining and the lengthening of contracts out to two or three years. the third influence on inflation has been the increase in competition both at home and from abroad. but inflationary pressures can not be completely eliminated and can be expected to make their presence felt as the economy pushes up against capacity constraints. that is something that is happening now, although it is a piecemeal process. there is no economy - wide definite dividing line between a situation of ample capacity and one where growth is limited by capacity constraints. for example, there has clearly been pressure on capacity in the building industry for some years, as anyone attempting to get a house built or renovated will confirm. over the past year, many parts of the resources and heavy engineering sectors have also been at virtually full capacity, and this has, among other things, limited our export performance. some parts of the services sector, such as accountancy and other professional services, are also fully stretched. on the other hand, there are other parts of the economy where things are relatively normal. but overall we are hearing more reports of businesses finding difficulty in hiring suitable labour and having to pay more for material inputs. the most obvious signs of this are the increases now being seen in producer prices at all levels and output prices for building and construction. there has not as yet been a big effect on consumer prices, but even so, the rise over the past year has been higher than our earlier forecasts had suggested. we have not seen evidence of an acceleration in across - the - board wages in the standard statistical series, although there is plenty of evidence from surveys that businesses are finding it more difficult to attract labour and that wage pressures are rising. of course, there is no reason why the inflationary process has to be triggered by a wage acceleration ; it could just as easily start with prices themselves and then move on to wages

terms of programmable money in this sense, we mean controlled and programmable by owners and users, not by prying authorities. a second question is, are we therefore talking about central bank digital money? after all, central banks – via reserves – already provide forms of digital money to the financial system. so must all forms come through central banks? not uniquely is my answer. there is no reason that i can think of which makes well designed enhanced digital money the sole preserve of central banks. but to achieve this will require engagement and innovation all round. a third question is whether there is a future for enhanced digital money? the precise answer is that we don't know, but then we never know the answer to this question precisely for new innovations, that's the whole point about innovating. in my view, more likely than not the answer is yes there is a future for digital money. moreover, we must avoid a failure of imagination. inability to specify a very precise detailed use case today is not a good reason to believe there will never be one. there are stories of scepticism around the benefits to be expected from the iphone, and going further back, railways. so, who might issue this new digital money, and might we see innovation which streamlines and hugely increases the productivity of important parts of our financial system? the answer to the second part is yes we could see major innovation and we should encourage it, no doubt. in thinking about sources, we can think of the types of money in two ways. first, we can divide it by who issues it. seen this way, there is commercial bank money – the deposits that households and firms make with banks and the loans banks make – and central bank money – the deposits banks make with the bank of england, and the banknotes we issue to the public. in terms of stocks of money, in the uk system commercial bank money amounts to around £3 trillion, and central bank money amounts to around £964 billion. and in terms of use, commercial bank money is used in 85 % of payments made by the public. second, we can look at who uses money and divide up money into retail and wholesale varieties. it's not a very precise divide in the world of commercial bank money, but more easy to define in the central bank world. in our world, we have £87 billion of retail central bank money – the stock of bank notes in issue used by households and firms, and