Substantial financial innovations – including advances in electronic payment and trading systems as well as more widespread credit card networks and increased use of mutual funds – have enabled consumers, investors, and banks to shift wealth cheaply and quickly away from currencies and assets subject to inflation and related risks.
Given the stronger competition among currencies, a government that pressures a central bank to pursue an inflationary policy gets much less benefit from increased inflation because people can more rapidly and conveniently switch out of the domestic currency.