Subdued wage growth, together with subdued inflation, are presented among the risks in the euro-area – while the divergent wage growth trends between euro area and emerging Europe are considered to reflect differences in labor market slack. Alternative explanations provided by recent international literature for the disappearance of the Philips curve refer to under-measuring the amount of spare capacity (slack) in the labour market; a lower natural rate of unemployment; lower or more anchored inflation expectations; and changes in expectations of real pay growth. The IMF’ REO presents an innovative econometric model reshaping the wage Philips curve against a measure of unemployment gaps. This shows that the Philips curve is flatter in the euro area than in the NMS, but that in general it still works. However, caution in interpreting the results is needed because this model splits the EU countries into three distinctive groups (Germany a group of its own, some euro-area countries and some NMS countries including euro and noneuro area, but excluding Romania and Bulgaria – probably because, in particular for these 2 countries, any measure of unemployment should be regarded prudently given the large emigration and underground economy). Let us remember that catching-up is an inflationary process in itself, as postulated by BalassaSamuelson. Maybe not much convergence is taking place between North and South, but catching-up has continued throughout the crisis between East and West – as Daniel Gros recently concluded in a CEPS study.
Jon Nicolaisen: Challenges for the payment system Speech by Mr Jon Nicolaisen, Deputy Governor of Norges Bank (Central Bank of Norway), at Finance Norway's payments conference, Oslo, 1 November 2018. * * * Please note that the text below may differ slightly from the actual presentation. Changing payment landscape The way we make payments is changing. New services and operators are constantly appearing. The underlying infrastructure, our payment system, must be adapted to the changes. But where is this all heading? How will we make payments in the future? And what will the future form of money be? The forces driving payment market developments are new technology, changes in consumer behaviour, globalisation, and new regulations, such as the new Payment Services Directive (PSD2). PSD2 requires banks to grant third-party providers (TPPs) access to their systems to enable TPPs to offer payment and account information services. PSD2 is both a response to developments in the payments market and a catalyst for future developments. At the same time, a number of large international technology companies are moving into the payments market. Apple offers mobile payment services to Norwegian customers. Google has just launched its own mobile payment solution in Norway. Other operators will follow suit. The role companies such as Facebook, Amazon and Alibaba may take remains to be seen. Vipps is now the only Norwegian mobile payment solution. A planned merger of the Vipps, BankAxept and BankID systems was announced towards the end of 2017. The merger was approved by the authorities in summer 2018.