Given the unequal starting position, however, the distribution of monetary gains for both income and net wealth is heavily skewed, with a quarter centred in London and the South-East. Charts 20 and 21 look separately at the effects of lower interest rates and QE, respectively, on the income distribution. Although part of the same strategy, these two instruments clearly operate through different channels and have different distributional effects. The effects of QE are predictably slanted towards financial wealth effects, while the effects of Bank Rate operate more through net interest income and house price channels. This analysis suggests that, with few exceptions, the impact of looser monetary policy on different cohorts of society has been positive and significant in income and wealth terms. Another way of making this point is to  28  Though a notable feature of the UK’s recovery has been that, notwithstanding the positive effects of monetary policy, the real income of younger people has fallen further and recovered more slowly than older age groups (Haldane (2016)). 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  ask what fraction of households are likely to have been made worse off from the loosening of UK monetary policy. Taking income and wealth effects together, only 4% of households were made £ or more worse 29  off. At the same time, this analysis has made clear that there are often large differences in the nature and scale of impact across cohorts.
You may be surprised to hear that we started a form of this exercise immediately after the tequila crisis in early 1995, well before the continuation of that crisis, now best described as the crisis of international finance, hit this region. While we were able to put together domestic contingency measures, some of which in the event had to be invoked, consideration of issues, involving as it did cooperation at the international and regional levels, took time. In any case, I must confess that none of us involved in this work, in Hong Kong and in the regional forums, were able to appreciate, let alone predict, when and how the crisis would hit us and how severe it would be. There was a lack of urgency and an abundance of scepticism about regional monetary cooperation. We have since pushed much harder in the international and regional forums, to the extent, I fear, that we might have become a little too noisy for the comfort of those who are, for one reason or another, in favour of maintaining the status quo in the international financial architecture. Indeed, of great concern to us is the inadequacy of the international financial architecture to cope with and harness the explosion of international finance. The size and volatility of global capital flows have grown tremendously relative to the global economy. Global output has grown by 26% between 1990 and 1997, before the financial crisis hit us. Global trade in goods has grown faster by 64%.