chart 2 : participation likely to recover as employment does so sources : ons and bank calculations. 2 - quarter averages. however, i doubt these things can fully account for the unusual strength in inflation ( given the contraction in the economy ). inflation over an 18 - month period may have been slightly lower than before the pandemic but the difference is barely noticeable. the cumulative drop in gdp, over the past six quarters, still comfortably exceeds the estimated hit to supply from the furlough scheme. and it ’ s perfectly normal for participation to fall in downturns ( not everyone who loses or quits a job immediately starts looking for another ). what ’ s impact on gdp estimated as the percentage hit to labour input multiplied by labour share in value added and adjusted for compositional productivity effects. impact on effective supply additionally strips out the contribution from those furloughed who are searching for a new job. this work was produced using statistical data from ons. the use of the ons statistical data in this work does not imply the endorsement of the ons in relation to the interpretation or analysis of the statistical data. this work uses research datasets which may not exactly reproduce national statistics aggregates. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice happened over the past year isn ’ t a surprise, given the drop in employment ( chart 2 provides the comparison ). whatever their contribution to recent rates of inflation we can at any rate expect the effects of lower participation and the cjrs to fade soon enough. the participation rate is likely to rise again as the labour market recovers and the furlough scheme is being wound down. so today, in the interests of thinking about what might prove more persistent sources of inflation, i want to concentrate on other things, stuff that ’ s not directly evident from the aggregate data. in doing so i ’ ll be expanding on a theme – the broad description might be “ mismatch ” – that i touched on in a talk earlier this year and that my fellow mpc members michael saunders and jonathan haskel have also developed in their recent speeches3. one of the things i pointed out at that time was that, despite the weakness in aggregate uk consumption, some areas of spending had been pretty strong. broadly speaking, and for understandable reasons, the pandemic had induced a sizeable shift in uk consumer spending from services to goods.

cross - border payments – innovating in a changing world speech given by victoria cleland, executive director, banking, payments and innovation central bank payments conference 13 october 2020 i would like to thank michael pywell, michaela costello, laurie roberts and cameron brooks for their assistance in preparing this speech. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice introduction i was delighted to be invited to speak at this event, during such an exciting time in central banking and the payments industry. i am sorry that we are unable to all meet face to face, not least as it was originally hoped for this conference to take place in athens. i cannot offer you the greek sunshine, but i would like to introduce some greek philosophy to get us started. plato taught us that ‘ necessity is the mother of invention ’ - this year ’ s virtual conference is a great example of that. so thank you to jean - michel and the team for their flexibility and ingenuity in holding this conference during such challenging times. and necessity and invention are at the heart of payments too. every one of us needs to make payments. while the medium of exchange might have undergone considerable invention and innovation since plato ’ s day, the importance of being able to exchange money safely and efficiently has not. the agenda for this conference – covering topics such as cyber security, artificial intelligence and digital currencies - gives an insight into the scale and pace of innovative thinking currently taking place in the payments industry. innovation is at the heart of the topic i will be focusing on today – cross - border payments. i will cover why greater innovation is needed in cross - border payments and outline the g20 initiative to develop a roadmap for action. i will then seek to bring it to life by outlining some of the key developments already underway at the bank of england to support the international agenda in this area. cross - border payments lag behind over the last decade or so, there has been a strong focus on further enhancing domestic payments with a significant increase in instant payments and great innovation at the customer - facing end. just consider our ability to pay for goods and services not just with cards and phones but also with watches and smart speakers. there is also a move to enhance the core underlying infrastructure. in the uk, the bank of england is renewing its real time gross settlement service and pay. uk is developing a new payments architecture for retail