In coming years, it is reasonable to expect global term premia to rise as net asset purchases could shift significantly from the situation during the past four years when all net issuance within the G4 was effectively absorbed (Table 1). 35  Hélène Rey has been a key proponent of the importance of such channels. See, for example, Miranda-Agrippino, S and Rey, H (2015), ‘World asset markets and the global financial crisis’, NBER Working Paper No. 21722. 36 IMF Global Financial Stability Report 2017, Chapter 3. 37 Cesa-Bianchi, A and Sokol, A ‘The international credit channel of US monetary policy and credit shocks’, forthcoming. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  Table 1: G4 net asset issuance still low in 2017  $ Asset purchases Bond issuance Net issuance  2008  2009  2010  2011  2012  2013  2014  2015  2016  2017  -61  1756  451  670  642  1756  1254  1312  1799  1338  2936  2664  3534  2486  2263  1753  1525  1093  1286  1527  2997  908  3083  1816  1622  -3  270  -219  -513  189  Notes: G4 here are the UK, EA, US and Japan. Bond issuance refers to annual changes in the stock of the general government debt. Agency debt is also included for the US.
11 Headline CPI inflation averaged 1.9% over this period. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Chart 5: Sustained, cumulative relative price shock in goods accommodated through higher services price inflation  Notes: Six-month average of the log-difference between core goods prices (excludes food and energy) and services prices (series indexed; 2005 = 100). The US series uses PCE price indices. Sources: Thomson Reuters Datastream, national sources and Bank calculation. Globalisation has also led to a dramatic increase in the use of imported intermediates in domestic production. The ICT revolution has made a great unbundling of production into global value chains possible, and large wage differentials have made doing so profitable. Intermediate goods trade has represented 80% of the increase in total trade over the past two decades (Chart 6), driving up the value added of imports as a share from 10% of exports in 1990 to around 20% in 2015. 12  12  See Auer, R, Borio, C and Filardo, A (2017), ‘The globalisation of inflation: the growing importance of global value chains’, BIS Working Paper No. 602. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Chart 6: The development of global value chains has boosted trade in intermediates  Notes: Imports and GDP are in current US dollars. Sources: Johnson and Noguera (forthcoming), Powell (2016), World Input-Output Database (2016 release) and BIS. This expansion in global value chains has led to greater synchronisation of producer price inflation across countries.