An effective implementation of monetary policy presupposes that there is a high level of private-sector confidence in the central bank with regard to both the inflation target and the monetary policy analysis. It also requires that the central bank is successful in communicating its analysis and intentions. In other words, a precondition for an effective monetary policy implementation is that the central bank is open and transparent. Most central banks use a short-term interest rate as the policy rate to implement monetary policy. However, the actual policy rate in the two months prior to the next monetary policy  BIS Review 29/2009  11  decision plays a very minor role in the economy. Expectations regarding future policy rates, on the other hand, do play an important role. They affect interest rates with longer maturities which in turn are the interest rates that have an impact on the economic decisions of households and companies. The Riksbank and a few other central banks have taken this seriously and publish their own policy rate paths to facilitate the formation of expectations regarding future policy rates and to influence these expectations more effectively. If the central bank is successful in its communication, the market participants should be able to predict rather well how new information or new shocks will affect the central bank's forecast for the policy rate. If the central bank's analysis is credible, the market's expectations regarding the future policy rate should also change in line with the revised interest rate path of the central bank.

If you heard nothing of it, or have subsequently forgotten, that is the greatest affirmation of success. Notwithstanding the significance of this accomplishment, the conversion was “like for like”, meaning no new service enhancements for customers or in support of policy interests. In parallel to System-wide efforts to advance Strategies for Improving the Payments System, we have therefore embarked on a corresponding set of Strategies for Improving the Fedwire Securities Service (SIFSS). The formation of these strategies actually commenced before the modernization even concluded in consultation with a range of stakeholders including securities issuers, depository institutions, financial market infrastructures, and policy makers. Prospective service enhancements were identified and assessed based upon their capacity to increase operational efficiency, mitigate risk, and reduce costs, among other factors, and were subsequently categorized in four main strategies: Strategy 1 seeks to improve and expand the Fedwire Securities Automated Claims Adjustment Process (ACAP). ACAP is a service that enables Fedwire participants to redirect principal and interest payments related to repo transactions or to failures to deliver or return securities by an agreed-upon date. The new offering, targeted for 2019, expands the service from MBS securities to Treasury and Agency securities; adds the capability for Fedwire participants to identify transfers related to securities lending activity in addition to repo; increases operational and technology efficiencies, and reduces the time (and thus risk) between when P&I payments are made and their repatriation.