perhaps the most cogent explanations are grounded either in legal restrictions ( including capital controls and lack of property rights ) and information asymmetries between home and host countries ( gehrig ( 1993 ) ). globalisation is likely to have eroded both of these market frictions somewhat over the past decade, in particular among emerging markets. that is consistent with the evidence in table 1. predicting the future course of these ( legal and information ) factors is far from easy. but one plausible instrument for financial diversification is economic development. cross - country evidence suggests so. chart 8 plots a cross - section of measured equity home bias in 58 countries against levels of gdp per capita in those countries in 2005. the correlation is strong and significant : gdp per capita accounts for almost 60 % of the cross - sectional variation in home bias. as a ready - reckoner, every $ 10, 000 per capita rise in gdp is associated with a fall in home bias of around 0. 1. 4 for example, o ’ neill ( 2011 ). this cross - sectional relationship was also used to counter - factually predict time - series patterns of home bias in a number of g20 countries. gdp per capita was a reasonable predictor of historical movements in home bias, in particular among advanced economies. bis central bankers ’ speeches using economic development as an instrument for portfolio diversification, gdp per capita projections can be used to simulate the possible future course of home bias. futurology of this kind of course comes with large caveats and confidence intervals. given the simplicity of the model, it is a thought - experiment rather than a forecast. and underlying that experiment is an assumption that advanced countries continue to grow and diversify their equity portfolios, but at a slower rate than catch - up emerging market economies. table 2 shows the evolution of equity home bias at decadal intervals out to 2050 for the g20 in this thought - experiment. some clear points emerge : all g20 countries see a reduction in home bias. the un - weighted g20 average home bias index falls by 0. 33 between 2010 and 2050. that is roughly the same rate of descent as over the past 10 years or so. among a number of advanced countries, home bias has been significantly eroded by 2050, in some cases perhaps implausibly so. for example, in the us home bias falls from 0. 51 to 0. 09. emerging market home bias remains in many cases significant even by the end of the

the resilience of the financial system ; and to support the uk ’ s transition to a carbon - neutral economy. carney, m ( june 2018 ) ‘ new economy, new finance, new bank ’ speech given at mansion house. all speeches are available online at www. bankofengland. co. uk / news / speeches first, to enable the digital economy the very nature of commerce is changing. last year, one fifth of all sales in the uk were online. 3 next year, it will be one quarter. over the past decade, the proportion of total payments made in cash has declined from two thirds to one quarter. 4 the digital economy is more inclusive, offering easier and more cost effective routes to market for firms both large and small, and greater access for consumers both near and far. this new economy is placing new demands on finance. consumers and businesses increasingly expect transactions to be settled in real time, checkout to become an historical anomaly, and payments across borders to be indistinguishable from those across the street. while there have been some notable successes, the uk system has a way to go before it meets these expectations. thus far, most innovation has happened around payment initiation – the method used to instruct a payment – such as credit or debit card, banking app or mobile wallet. there have also been some advances in the networks – or rails – that underpin some of these apps. for example, the faster payment system ( fps ) launched a decade ago has made payments quicker ( within two hours ) and more cost effective by encouraging direct bank - to - bank transfers. while mobile app paym uses fps to facilitate direct bank - to - bank payments between individuals via text, it requires both the sender and recipient to be signed up to the third party service. but few are. 5 and fps is not yet used for in - store or online purchases as the infrastructure required at the point of sale does not reliably exist in the uk. 6 in these regards, the uk is still a long way behind countries such as sweden, the netherlands and india where users can make direct, free and real time bank - to - bank payments in stores and online with a text or a scan of a qr code. 7 uk card payments are convenient and they are now the most popular means of payment, but they can cost between 0. 5 % and 2 % of the total transaction value, and it can take three days