Since then the degree of uncertainty, as measured by the width of our fan charts, has decreased significantly, while the balance of risks has shifted as I have set out to being two-sided. While the range of potential outcomes is, as I have described, a complex and multidimensional one, and is still beset with considerable uncertainty, I find it helpful to map out three broad scenarios which for me summarise how the risk factors may play out, and map across to what course the economy might take in future. 12  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  12  The first potential scenario I foresee is broadly in line with the MPC’s “central expectation” set out in the June minutes: that the economy will experience a temporary period of strong GDP growth and above-target CPI inflation, after which growth eases and inflation fall back towards the 2% target. Of course as I stressed earlier, “temporary” doesn’t necessarily mean ‘here today, gone tomorrow’, particularly for inflation. The supply side pressures and their interaction with demand might take some time to disperse. In the mean time we could see very high inflation in certain sectors and products, such that at a whole economy level I wouldn’t be surprised to see the whole economy CPI inflation rate potentially rising as high as 4% for a period later this year, before falling back towards the 2% target. That would not be an unprecedented event: we saw similarly high outturns in 2008 and 2011.
These notes evolved to become payable to “the bearer” rather than just the original depositor making it more convenient for people to carry and exchange the paper notes, rather than the underlying gold. Realising that it was highly unlikely that all of their customers would want to withdraw all of their gold at any point in time, goldsmiths soon began to issue more notes than the value of the gold in their vaults, by making loans. Thus goldsmiths formed the basis of modern banks, and could create money in much the same way as banks do now. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  We are not, I am pleased to say, seeing today the sorts of issues that arise when the ‘machine’ of money, to use Mill’s words, ‘gets out of order’. But we are seeing changes in the technologies that support money in our economy. And given, as I will explain, that the Bank of England’s role is essentially the stewardship of the money of the UK, that is something we need to understand and to which we need to be ready to respond – calmly and carefully. Before discussing some of these changes and the role of the Bank, it is worth dwelling a little on what money actually is.