rate ). as a result, central bank money and government debt – the two sides of the qe transaction – are closer substitutes than they otherwise would be. this has the effect of making the downward slope of the md line less pronounced. third, the model – the way it was often taught in the textbooks, at least – glosses over the distinction between “ narrow ” and “ broad ” money. for the wider economy it ’ s clearly the second that matters. firms and households don ’ t have deposits at the central bank – for them, “ money ” is what they hold in their commercial bank accounts. but, as conveyed to students, is - lm elides the two, assuming that the one is just a multiple of the other [ 8 ]. the implication would be that central banks can control broad money more or less directly and as precisely as they do their own balance sheets. in practice, however, as we saw in the introduction, the two have behaved rather differently. i ’ ll discuss this more fully in a moment. monetarist objections to is - lm none of this is fatal for is - lm. the model can be adapted and expanded to accommodate some of these complications. and, during the debates about inflation control in the 1960s and 1970s, most economists – of all persuasions – would have accepted that chart 7 captured an important part of the transmission of policy ( open - market operations, at least ). but the “ monetarists ” raised a deeper objection – and it concerned precisely this assumption that an increase in the supply of money worked only by lowering the level of interest rates. they argued that it could also affect spending more directly. in essence, if one is at least to preserve the language of the model, their point was that a rise in the supply of money – broad money at least – should shift not just the “ lm ” curve to the right but the “ is ” curve as well ( chart 8 ). chart 8 : monetarists argued that money affected spending directly, not just via interest rates and asset prices imagine something like friedman ’ s “ helicopter drop ” – a sudden, windfall addition to everyone ’ s bank account. on its own, if nothing else happened, this would push up household wealth ( the “ w ” term in [ 1 ] ). so even the conventional is curve says the result would be stronger demand. but let ’ s suppose the “ drop ” is financed by a tax on

like stablecoins. i will talk about the first wearing my hat as chair of the bank for international settlements ’ committee on payments and market infrastructures ( cpmi ) and co - chair of the financial stability board ’ s cross - border payments coordination group ( cpc ), and about the second and third wearing my bank of england hat. i will of course be giving up both hats next week when my bank of england term finishes, so this is really my parting shot. cross - border payments the libra project raised significant regulatory and financial stability concerns, leading to swift statements from both the g7 and g20 that “ no global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks … are adequately addressed ”. but the project, and the benefits it claimed it could deliver, also shone a light on the cost, speed, reliability and availability of cross - border payment systems - a long - neglected corner of the international financial system. central banks, finance ministries and regulatory authorities realised quickly that they could not simply focus on the risks that new players and new technologies might bring ; they needed also to understand and, if possible, address the shortcomings in the existing, less risky systems that created such opportunities for new technologies and new players. and shortcomings there certainly were. in contrast to the improvements in domestic payment systems that were increasingly being seen in many jurisdictions, cross - border payments were slow, expensive and unreliable. removing frictions in wholesale, retail and remittance payments across borders could both yield substantive economic benefits and improve access for millions to the international financial system. so in february 2020, g20 finance ministers and central bank governors tasked the fsb, cpmi and others to develop a roadmap to enhance global cross - border payments. work by fsb and cpmi revealed that this was not a simple problem, amenable to one or two quick solutions, but rather a complex set of interlocking frictions, both in the public and private sector, exacerbated by weak competition. moreover, while there were common themes, there was also substantial variation by payment types and by region and jurisdiction. the cpmi produced a comprehensive list of the necessary action areas, the so - called ‘ building blocks ’, covering infrastructure, data, regulation and competition, and these formed the basis of the fsb ’ s roadmap of actions adopted by g20 leaders in the autumn of 2020. so, three years on, as