But that’s not the only thing going on. Spending on some of these “non-risky” things have actually risen faster than incomes – in some cases faster than they have for many years. So it looks as though consumers  10  Chapter 4 of that Report went through a number of reasons why, at least in the short term, the response of inflation to demand might be smaller than usual under these circumstances. Services prices tend to be “stickier” than average, so a downturn centred on consumer services may be less disinflationary in the first instance. If orders take time to respond, a cut in prices will initially reduce a firm’s profits. When balance sheets and cashflow are under pressure, firms may therefore be more reluctant to make such cuts. 14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  used some of the money they would have spent on riskier activities – going to restaurants and so forth – to buy other things instead. This makes sense. A pound less spent on one thing needn’t mean a pound less in total. Indeed under some (admittedly extreme) conditions you’d expect substitution of this sort to be one-for-one. If people are entirely indifferent between different sorts of consumption – if they’re just as happy with “non-risky” as “risky” stuff – aggregate spending wouldn’t fall at all (for given income). What they saved on one would be spent in its entirety on the other.
Mojmír Hampl: The EU banking industry Speaking points by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the European Economic Congress “Section: Banking Industry in the EU”, Katowice, 15 May 2012. *  *  *  “Dzen dobry” – this is unfortunately the only thing I can credibly say in Polish, so the rest will be in my imperfect English. Thanks to the organizers for the invitation and for the opportunity to participate in such a distinguished panel. It is my first time here and I can only hope not the last one after I finish my presentation. Given the time constraints I will focus on a just a couple of quick points to stimulate the debate. My key point is: Let’s not repeat the same mistakes again and again. What I mean is this: Since the onset of the current crisis there has been a constant push for a more pan-European, or “federal-like”, approach to the regulation, supervision and potentially also resolution of the financial industry in the EU. The famous de Larosière report and all its consequences, such as the three new pan-European supervisory agencies, are just direct results of this push and this way of thinking. Some may recall that the Czech authorities were quite reluctant to accept this approach and also the final compromise which brought these agencies into existence, and we believe we had good reasons for this.