Innovation in the financial sector is largely about risk – how to slice it, how to package it and how to trade it. You can think of it in two dimensions, innovation in products, illustrated by new types of securities, and innovation in processes that can be related to new means of distributing securities.
This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to our two per cent medium-term target.