However, our experience has been that heavy and sustained interventions have little influence on the exchange rate, and hence inflation. Exchange interventions, whether they involve selling or buying currency, are not an appropriate means of influencing the exchange rate over time. If Norges Bank intervenes heavily in the market, a game situation may arise where market participants perceive central bank interventions as an interesting opportunity to make a profit. Market participants know that interventions cannot be sustained. This tempts operators to take positions against the central bank, thereby intensifying the pressure on the krone. Under the European currency crisis in 1997-1998, and probably during the currency turbulence in 1997-1998 as well, these mechanisms appeared to be at work. Norges Bank does not intend to act in a way that prompts such game situations. 6  BIS Review 74/2001  Other countries that conduct monetary policy using an inflation target also use the interest rate as the main instrument, and interventions are used only by way of exception. Over the last year, however, the ECB and Sveriges Riksbank have intervened in the foreign exchange market. The ECB intervened for the first time in September last year. The interventions were undertaken in concert with several central banks, including the Federal Reserve and the Bank of Japan. The ECB intervened again on three occasions in the beginning of November, but this time unilaterally. The ECB subsequently maintained that the interventions had been successful.
Although some key payment systems are probably less vulnerable to generic, non-bespoke attacks2 than most financial firms, given their limited reliance on the internet, the consequences of a successful attack could be  1  http://www.bankofengland.co.uk/publications/Documents/records/fpc/pdf/2013/record1307.pdf. 2  Such as “distributed-denial-of-service” (DDoS) attacks – which affected some banks earlier this year. BIS central bankers’ speeches  3  severe. Addressing this cyber threat will not be just about IT security and system enhancement, but also people, processes and culture, posing challenges to the managers of FMIs as well as their overseers. For systemically important systems, recovery arrangements are particularly important, and this is an area where alternative technology such as MIRS could come to the fore. The next issue relates to the times at which the Bank’s RTGS system can be accessed by settlement banks. Currently it operates for around ten hours each business day, with the most recent change occurring in 1999. Since we made that change, a number of central banks have lengthened their RTGS operating hours quite considerably, most obviously driven by the demands of the internationally-harmonised CLS cash settlement window, and also by a more general desire to operate with a greater overlap with major markets in other time-zones. And in the UK the move to a cash pre-funded model for two of our largest retail systems may create a latent demand to access the RTGS system outside of its current operating hours. Faster Payments, which operates 24/7, often provides confirmation to customers almost instantly.