For example, we are working within the framework of the Swedish Retail Payments Council to survey the possibilities of making card payments and withdrawing cash in an offline situation, which is to 14 See Mancini Griffoli, T., Martinez Peria, M. S., Agur, I., Ari, A., Kiff, J., Popescu, A., and Rochon, C. (2018) “Casting Light on Central Bank Digital Currency”. IMF Staff Discussion Note. SDN/18/08. 15 It may, however, be difficult to know what the right price is in such a market. Theoretically, an efficient market is considered to be one in which no company makes excess profits. The price of one product should approximately reflect the cost of producing one more product, known as the marginal cost. But if the price were to reflect the marginal cost, the company would make a loss in these special markets. In normal industries, the marginal cost normally rises when production encounters bottlenecks. For natural monopolies, fixed costs dominate instead, so that a price corresponding to the marginal cost will be too low. 6 [8]  say when disruptions have made it impossible to check the balance of the account or credit to which a card is linked. 16 At present, certain cards do not function at all in an offline situation, while others do. If we were to be impacted by a complete breakdown of both the Internet and telecommunications, it would not be possible to withdraw cash. Consequently, we cannot, at present, rely upon cash being available in a crisis situation.
We are not out of firepower by any means, and to be honest it looks from today’s vantage point that we were too cautious about our remaining firepower pre-Covid. But, hindsight is a wonderful thing when you have it. In the decade ahead, I think we need to take on board the message the Covid crisis has reiterated, namely that our tools may be state contingent in their effects. And with that in mind, let’s not ignore the need to manage central bank balance sheets to enable such state contingency to take effect. There are times when we need to go big and go fast. Thank you. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6