, in helping countries that get into difficulty. many of the crises in emerging market economies have been marked by a sudden withdrawal of private sector capital, including outflows to private sector creditors of official funds intended to stabilise the position and reverse this capital flight. the bank of england has taken a leading role in discussion with other governments and central banks, and with the private sector market participants, to find a more orderly approach to crisis situations and to avoid the kind of damaging scramble to withdraw funds from emerging market economies that marked the asian crisis. the second area of bank involvement is market infrastructure, the payments and settlements systems that underpin financial markets. given the size of payment flows, domestic and cross border, the importance of robust and reliable systems is paramount. any failure in payment systems would result in gridlock and widespread disruption. the bank has an operational interest, closer to home, in that payment systems, especially in the wholesale market, often rely on the transfer of payments across central bank accounts. because of this, under the mou the bank is explicitly given responsibility for the systemic oversight of payment systems. in carrying out this responsibility, we take a close interest in the interaction of these systems with other parts of the infrastructure - settlement systems and clearing houses. this interest extends to exchanges and the dizzying process of alliances, mergers and failed bids that has marked the attempt to consolidate global equities markets, especially in europe where, despite emu, trading is still widely split between markets. the third area of bank involvement is regulatory policy. although responsibility for supervision of the bank has passed to the fsa, the bank retains an interest in the design of the regulatory structure and the impact that this has on the stability of the system as a whole. the bank is represented on the basel supervisors committee and has been closely involved in discussions on the new basel accord and the capital requirements to be applied to banks. clearly ensuring that individual banks are adequately capitalised has a direct bearing on the ability of the system as a whole to withstand shocks. however it is only really in a crisis or an economic downturn that it is possible to tell what the full story is. as one of my colleagues colourfully puts it, it is only when the tide rolls out that you find out who is not wearing swimming trunks! the final area i would like to mention is the bank ’ s role in reviewing financing for business in the uk. this is more focused on efficiency and competitiveness than financial stability but, over

the underlying causes of this dispersion, it seems to have resulted in a degree of mismatch in the labour market. some firms are finding it hard to recruit people, even as others have kept significant numbers on furlough. if only at the margin, this mismatch may have added to all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice near - term pressure on wages. the full - time pay of those on furlough doesn ’ t fall but, where there are shortages, firms have to pay more4. in january, i felt that these mismatches would probably get ironed out over time. if the pandemic had caused significant shifts in demand those would be reversed as economies recovered : we were likely to see the strongest growth in the areas hardest hit during the downturn, and in which there was therefore more spare capacity. and if these shifts turned out to be more persistent they ’ d in time be matched by corresponding reallocations of supply. for tradable goods, i still think this is a reasonable central case. the shift towards goods demand is unlikely to endure forever and there may already be some early signs that consumer spending – here and in other countries – is rotating back to services. and in many of these markets supply looks to be reasonably “ elastic ”, at least over the medium and longer term : it responds positively to higher prices, ensuring a degree of self - correction ( you can think of this as a flattening out of the cost curves in charts 3 and 5 ). for most non - oil commodity prices, for example, periods of rapid growth tend to be followed not just by lower inflation but by rates of inflation that are actually below average. there ’ s evidence of the same mean - reverting tendency in manufacturers ’ input prices in aggregate. it may also be a reasonable central case in the domestic economy but here things are more uncertain. some shifts in spending may stick. if significant numbers of people continue to work from home, for example, the resulting changes in the pattern of spending – away from city centres, and on transport, and towards other areas and other goods and services – could endure. and it would take time to shift resources – people, capital, know - how – accordingly. the uk labour market is flexible and here too there are early signs that the degree of mismatch may be easing a little