The internet undoubtedly brings us the prospect of greater choice and efficiency in financial deals, but it also sparks certain concerns. These fall under two headings: consumer protection, with worries about scams, transparency, security, accountability, legal recourse, and so on; and systemic stability, with questions as to whether the financial system might become more vulnerable to crisis as a result, for example, of a major technical failure or of a massive herd movement of money in a particular direction. This is a vast subject, so I need to narrow down my focus today. I want to discuss some of the issues which businesses or individual members of the public may face in relation to electronic money on the internet. And I then want to discuss some points which a central bank has to address in the monetary policy context when confronted with electronic money. In fact there are two types of electronic money: that which is held on the internet and that which is held in stored-value cards. Multi-purpose stored-value card schemes have been slow to become established, despite quite lengthy pilot projects in a number of countries. Hong Kong was nevertheless one of the first places to introduce regulations governing the issuance of such cards. Meanwhile, limited-purpose cards have proved more successful; we have a particular example in Hong Kong with the Octopus card, used to pay for public transport, which is hugely popular.
The reason we are taking a while to bring down inflation is that our job is also to contribute to keeping as many people in employment as possible. We do not want to restrain the economy more than that required to tame inflation. Many people are now worried about trying to make ends meet. Borrowers are facing higher interest rates on top of high inflation. Many families are facing tighter budgets, which will be hard for some groups. But by raising the policy rate, we are helping to bring down inflation. Norges Bank  Economic perspectives 2023  10  The road ahead The past few years have reminded us that price stability cannot be taken for granted. We have also been reminded that events that constrain the supply of goods and services can have a substantial impact on prices. We must be prepared for potential threats to price stability in future too. Some of the driving forces that kept inflation low in the decades up to the pandemic may be going into reverse. Globalisation has been met with growing opposition. Already before the pandemic, new trade barriers were erected – often to promote a country’s own economy. The pandemic and Russia’s invasion of Ukraine have demonstrated that long global value chains and trade in strategically important goods make us vulnerable. Lower trade globally and measures to build more robust supply chains could lead to lower productivity and higher prices. Demographic trends are also shifting. In many countries, the working population is on the decline.