To assess that, we need to identify the distinct impact of monetary policy on the economy, both in aggregate and looking across the household distribution. Step Two: Calibrating the Impact of Monetary Policy  The policy episode we consider is the relaxation of UK monetary policy after the global financial crisis. These actions by the Bank’s Monetary Policy Committee (MPC) comprised: first, the reduction of short-term interest rates by 5 percentage points (from 5.5% to 0.5%) between February 2008 and March 2009; and second, the purchase of £ billion of government securities between March 2009 and mid-2012. In combination, these measures represented a very significant relaxation of UK monetary policy, perhaps the largest in the Bank of England’s history. We consider their combined effects, as interest rates and QE were part of a single monetary policy strategy by the MPC. Nonetheless, given their potentially different distributional consequences, we also consider the effects of QE and interest rates separately. To trace out the impact of these monetary interventions on the economy and on households, we use a macro-to-micro simulation approach. This involves two mappings. The first is from the monetary impulse to a small set of macro-economic aggregates (interest rates, employment, wages, equity and house prices and consumer prices). This is done using the Bank of England’s macro-economic model. Charts 7-9 show the effects of the combined monetary stimulus on aggregate GDP, unemployment and CPI inflation.

This is going to be a transformational change for payments in the UK – the first stage of the cutover for CHAPS is planned to occur in 2022. So I encourage any of you engaged in systems or settlement to start considering now the impact on your own systems and operations – both so you can be ready for the change and take advantage of the benefits. And at the softer end of our infrastructure agenda, we have the FCA, HMT and Bank’s Fair and Effective Markets work19, which aims to catalyse improvements to fairness and effectiveness in FICC markets. A focus of this work on the immediate horizon will be the use of technology in post-trade. 16  A new messaging standard for UK payments: ISO 20022. Available at: https://www.bankofengland.co.uk/payment-andsettlement/rtgs-renewal-programme/consultation-on-a-new-messaging-standard-for-uk-payments-iso20022 17 See https://www.ecb.europa.eu/paym/target/tips/html/index.en.html 18 Ramsden, D. (2018). Setting Standards. Available at: https://www.bankofengland.co.uk/speech/2018/dave-ramsden-remarks-at-iso20022-conference 19 See https://www.bankofengland.co.uk/markets/fair-and-effective-markets 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  Given the challenges to the use of technology in post-trade that I mentioned earlier, the Bank and FCA will convene an industry-led “Technology Working Group” to bring together different financial market stakeholders to catalyse collective action and reform in the use of technology in the post-trade system. This may help in identifying a way forward on reducing the e cost and inefficiencies in the post-trade processing of financial market transactions, reducing complexity and increasing system-level resilience.