prices. these are more relevant than the spot price for retail pricing. bank of england persistent, however. and reducing it requires the economy to grow below its trend rate for a period of time. because they ’ ve depressed real incomes, that slowing in demand will to some degree follow from the very same rises in import costs that have pushed up headline inflation. equally, if government support mitigates that effect, there is more at the margin for monetary policy to do. the mpc is likely to respond relatively promptly to news about fiscal policy. whether official interest rates have to rise by quite as much as currently priced in financial markets remains to be seen. i ’ ve received helpful comments from colleagues at the bank of england. i ’ d like to thank fabrizio cadamagnani, kieran dent, joseph oyegoke and doug rendle for their help in preparing the speech. the views expressed are my own and do not necessarily reflect those of the bank of england or other members of the monetary policy committee or the financial policy committee.

non - bank money might be the next big thing. or they might be a flash in the pan. i don ’ t have a bet here – i am a central banker not a venture capitalist. my job, as a central banker and regulator – in all of this – is to ensure that financial innovations, including new forms of digital money, do not impair the bank of england ’ s ability to maintain monetary and financial stability. this shouldn ’ t be confused with preserving the status quo. financial stability is n ’ t about protecting incumbent banks or other existing firms from competition. instead financial stability seeks to ensure that people and businesses can rely on essential financial services – like the ability to make a payment or the ability to get a loan – in bad times as well as good. a regulatory framework earlier this week, the bank of england published a discussion paper that examines the implications of stablecoins for its financial and monetary stability mandate. in it we present an illustrative scenario to examine the implications of the emergence of stablecoins and other new forms of digital money. the discussion paper models what would happen if a large number of households and businesses moved their deposits from banks and into a stablecoin or central bank digital currency ( cbdc ). contrary to some press headlines, even such a dramatic shift does not inherently constitute a financial stability risk as long as it happens in an orderly manner. in fact findings show that the implications of this in the long term for the ability of households and businesses to get a loan are relatively modest – although there is considerable uncertainty around this result. as such, while other risks may arise during a transitionary phase, the most significant risk arises from the potential for stablecoins in particular to undermine confidence in money and payments, and hence in the wider financial system. as we discussed a few minutes ago, the risk of a loss of confidence in the credibility and stability of private money is not theoretical. loss of confidence in private money can be a major threat to financial stability. but it is equally true that private money can be made acceptable as a widespread means of payment – indeed, as i covered earlier, the vast majority of money held for transactions in the united kingdom is already private. so, with the right regulation, a stablecoin could potentially be made safe for wide - scale use. our existing regulatory framework seeks to ensure that the public is able to trust the reliability and stability of the money it uses every day. banks are subject to extensive rules and