SPEECH  Considerations on the Road Ahead for Monetary Policy Implementation June 02, 2022 Lorie K. Logan, Executive Vice President Remarks at the New York Fed and Columbia SIPA Monetary Policy Implementation Workshop, New York City As prepared for delivery  Good afternoon. It is a pleasure to speak with you today at the New York Fed and Columbia SIPA workshop on monetary policy implementation. Many of you have attended these workshops in the past, and it is great to be together again to talk about issues of essential importance to policy implementation. It is also nice to see so many new participants, reflecting the broad interest and engagement in the topic of digital innovation. Over the past two days, we heard about faster forms of payments and new, digital forms of money—both private and public—and the effects they might have on money markets, policy implementation frameworks, and the international landscape. Digital innovation in money and payments is occurring for a reason—consumers, businesses, and financial market participants can benefit from around-the-clock, faster, and possibly programmable payments, both to reduce risk and to simplify financial transactions. Increased competition that results from new forms of money and payments could lower costs, increase service availability, and stimulate further innovation. Harnessing the benefits of innovation to consumers and businesses, while maintaining a safe and effective monetary system, may require new legislation, changes to regulations and to supervisory approaches, and modernization of traditional payment systems. The specifics of the appropriate initiatives will vary by country.

[14] Longer and better aligned hours of operation could speed up cross-border payments, reduce settlement risk and simplify liquidity management, and the Bank’s renewed service will have the capability to offer longer hours. But we need to carefully weigh the benefits against the potential cost. These include the costs of opening systems for longer and implementing novel approaches to technology upgrades when the concept of ‘out of hours’ disappears. We also need to consider how it would affect other markets, established market conventions and monetary policy transmission. It will be essential to work closely with the private sector to assess how, and over what timescale, RTGS operating hours could be extended. Changes in hours and access could also support some of the more recent ideas around directly interlinking national payment systems. This would enable payments to be settled directly between two providers, further cutting down the transaction chain. Projects to interlink payment systems are gathering momentum around the globe, building on pioneering experiments through Project Nexus and IXB. In July, the CPMI in cooperation with the Indian G20 Presidency will host an event on interlinking arrangements. The existing projects have shown that interlinking is feasible on a technical level. An arguably tougher challenge is to find the right governance, risk management and oversight models to support a cross-border interlinking arrangement that is robust, resilient and inclusive. The CPMI is preparing an interim report for the G20 on this topic later in the year.