We could, for example present an “optimal” interest rate scenario, based on model-based calculations and an explicit loss function, or on more judgmental assessments. Another alternative is to base future interest rate developments on a simple rule, for example, a variation of the Taylor rule. In the inflation reports of The Reserve Bank of New Zealand, the interest rate varies over the projection period based on a simple forecast-based interest rate rule. Even though these endogenous interest rate paths are a theoretically more satisfactory way of presenting these forecasts, they are not unproblematical. For example, an “optimal” interest rate path could lead to a misconception that the central bank is committed to setting future interest rates in line with this path, regardless of the shocks that occur. An interest rate path based on a simple rule may give the impression that the interest rate is actually set on the basis of this rule. 9  Svensson, L. E. (2003): “Comments on Laurence H. Meyer, ‘Practical Problems and Obstacles to Inflation Targeting’”, at the conference “Inflation Targeting: Prospects and Problems”, the Twenty-Eighth Annual Economic Policy Conference, Federal Reserve Bank of St. Louis, October 16-17 2003. BIS Review 6/2004  5  In terms of communication, there is no definitive answer as to what are the best interest rate assumptions. Sometimes, projections based on specific interest rate assumptions may indicate that the monetary policy objective will not be achieved within a reasonable horizon.

The new service will be materially stronger and more resilient in an increasingly complex and sophisticated environment. It will be flexible to protect against the threats we understand today and the ones we will need to adapt to in the future. RTGS Renewal will promote greater access to payment systems. We have already made policy changes to allow non-bank payment service providers direct access to payment systems and RTGS Renewal will reduce 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  some of the barriers that we know exist today. It will speed up on-boarding times to the system and reduce the operational overheads of membership. These changes will further accelerate the number and range of firms that can gain direct access to payment systems. Since 2018 five non-bank payment service providers have opened accounts in RTGS and around twenty further firms are exploring the possibility of joining. These firms can benefit from faster transaction times and reduced individual transaction costs. Consequently, the Bank hopes to encourage a greater diversity of players in the payments market, thereby encouraging innovation and competition through development of new business models and ultimately creating a more diverse payments landscape. This will increase efficiency and reduce concentration risk thus supporting financial stability. RTGS Renewal will also promote resilience and efficiency through greater interoperability across payment systems. An important step to achieving this is the introduction of a new payment messaging standard for UK payments: ISO20022, the emerging global standard for payments messaging.