trade growth has slowed and the export outlook has dimmed. capital goods orders are stagnating, investment growth has become more tepid, and business confidence is diminished ( chart 1 ). chart 1 : global momentum is weakening index, amplitude adjusted, long - term average = 100 percentage change, 3 months on 12 months ago oecd business confidence world trade in goods us & ea capital goods orders - 5 - 10 sources : ecb, conference board, cpb, oecd, and markit economics and bank calculations. all speeches are available online at www. bankofengland. co. uk / speeches in part, the deceleration of the global economy reflects the shift from accommodative to tighter financial conditions that occurred initially in emerging economies, then in most advanced economies, and finally and sharply in the united states ( chart 2 ). last year, the returns on all major asset classes from equities to credit to sovereign debt were negative. cash once again was king. chart 2 : global financial conditions indices tightened over 2018 united kingdom standard deviations from historical average united states emerging market economies global - 1 - 2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 sources : bloomberg finance l. p., eikon by refinitiv and bank calculations. the tightening of financial conditions globally partly reflected the usual – if somewhat delayed – reaction to the tightening of monetary policy. 1 over the past year, the withdrawal of monetary policy accommodation gathered pace. the fed raised interest rates four times, and the bank of england and ten other g20 central banks also tightened policy. in addition, after five years in which there was no new net issuance of g7 government debt, new government borrowing outweighed central bank purchases by more than $ 1 trillion for the first time since 2012. potentially more seriously, the slowing in global momentum may also be the product of rising trade tensions and growing policy uncertainty. global economic policy uncertainty is at record highs ( chart 3 ). and protectionist rhetoric is becoming reality, with the united states raising tariffs on a range of imports from its main trading partners, and some retaliating in kind ( see annex table a1 ). if all measures contemplated are implemented, average us tariffs will reach rates not seen in half a century. overall, financial conditions in the us have tightened by around half a standard deviation over the course the current tightening cycle thus far ( chart 2 ). this is a similar cumulative increase

the stablecoin is operating as a bank, the backing assets for stablecoins cover the outstanding coin issuance at all times. an alternative to a private stablecoin, but not a mutually exclusive one would be central bank digital money in the form of a central bank digital coin ( cbdc ). central bank money has a unique role in anchoring value and promoting confidence in monetary systems. a cbdc could therefore play an important role in sustaining, and potentially expanding retail access to central bank money. i have discussed the public interest in the safety and security of money. but there is another very important public interest in this area which goes to the heart of the monetary and financial system. i mentioned earlier that commercial bank money combines in one place – bank accounts – the store of value and means of payment functions of money and in doing so enables lending to the real economy. what if new forms of digital money – stablecoins or cbdc – result in a large scale displacement of commercial bank money which means that a higher fraction of money in the economy must be backed by high - quality liquid assets rather than by loans to the real economy, with this being necessary to preserve the stability of a now more fragmented financial system. in that event, real economy loans could be financed instead by more expensive sources of funding, reducing the efficiency with which commercial banks extend credit. this could lead to greater reliance on non - banks for credit provision as some borrowers find it cheaper to seek credit opportunities outside the banking system. i should emphasise that our work – and the scenario we use to illustrate these effects in the paper – does not at this stage suggest that the impact on lending rates and credit provision is more than modest. so this does not look headline making. but, there is a lot of uncertainty around how this could work out. we don ’ t know much about the likely demand for digital money, or about how it will be remunerated, all of which is important for determining these effects. the authorities may also wish to limit the speed and scale of any transition to digital money in the interests of greater assurance that there will be no threat to financial stability. continuing with the provision of credit, greater reliance on longer - term stable funding by banks could reduce the likelihood of a sharp deterioration in bank credit conditions. however, banks will 3 / 4 bis central bankers'speeches also be vulnerable to a deterioration in sentiment in wholesale funding markets. as a result, lending rates could be more volatile overall