decisions in, say, investment management. decision - makers will therefore want to have not just a set of numbers but a sensible story about the future. regardless of how a forecast was arrived at - from a formal model, judgement, some combination - it is more useful to decision - makers if its main features, and the factors driving them, can be fairly simply explained. the plausibility test of a view is most effectively applied when the story is kept as straightforward as possible ( though not more so ). a forecast is even more useful if the forecaster can identify key assumptions, be they about exogenous variables or the structure of the economy, and what the consequences would probably be were those assumptions to be astray. we can, of course, look to the statistical properties of econometric models to give some indication of the size of likely confidence intervals around a central forecast, and that is a reasonable place to start a discussion of uncertainty and risks. consumers of forecasts should routinely be told something about the size of past errors. but anyone looking to make a decision on the basis of a set of forecasts - like an investment manager, or an economic policy - maker - looks for some judgement about possibilities to which history may not be a good guide. what if the underlying structure of the economy is changing - i. e. the model parameters are shifting? suppose, for example, the responsiveness of inflation to exchange rate changes is less than it used to be? what if the economy is more responsive than it used to be to recent changes in interest rates? for that matter, what if it is less responsive? if an outcome is different from the central forecast for some key variable, is it more likely to be higher or lower? decision - makers, in other words, are interested in forming a judgement about the balance of risks. that judgement can only be subjective, to be sure - but that is where the experience of a good forecaster is most valuable. the decision - maker will then want to combine that subjective assessment of the risks with some sense of the relative costs and benefits of the possible outcomes, and decide which risks they should most avoid, and which they are prepared to run. this much is, i hope, well understood these days : the question asked of forecasters shouldn ’ t just be ‘ what ’ s the number? ’ it should also be ‘ how could you be wrong? ’ hopefully you will probe some of these sorts of questions later today. forecast

speech the future of the payments system brad jones * assistant governor ( financial system ) auspaynet summit 2024 sydney – 12 december 2024 thank you for the invitation to open the batting at this year ’ s auspaynet summit. this forum is always a highlight on the calendar − for industry and policymakers alike − and i am sure this year will be no different. not so long ago, opining on the future of the payments system may have been a somewhat mundane affair. not a great deal changed from one year to the next, and not too many folks, other than the true payment system diehards, were interested. not so now. for a start, our payments system is rapidly evolving. new innovations are springing up at a dizzying pace. and the payments system has never been more critical to the functioning of the economy. almost $ 300 billion in payments now settle across the rba ’ s central infrastructure each day. this is equivalent to australia ’ s annual gdp flowing through the payments system every 10 days. furthermore, debates over the future of money and payments now regularly feature in the public square – and as i am discovering, the public square very much extends to summer barbeque conversations. in some sense, money and technology have always been the subject of popular fascination, but this seems especially true today. in short, to channel a former prime minister, it has never been a more exciting time to be in payments. my remarks today will focus on the challenges and opportunities in front of all of us involved in payments. there is no shortage of both. but before diving in, let me briefly set the scene by highlighting where our payments system stands today, and the rba ’ s role in it. the current state of australia ’ s payments system australia has a payments system that we can be proud of. by global standards, it is fast, efficient and reliable. this is evident not only in the data, but from the discussions that i and my colleagues at the rba and on the payments system board regularly have with our international counterparts. it is also worth noting that for the better part of a couple of decades, retail merchant card payment costs have trended lower in australia in response to increased transparency and competitive tension in the market for payments services ( graph 1 ). some of this competitive tension has arisen organically, and some of it has come about as a result of intervention by the rba. graph 1 this brings me to the mandate