A key characteristic of the Swiss Money Market Value Chain is that it provides access to about 150 banks and other financial market participants using a single platform and a common set of rules. Another characteristic is that the SNB has direct access to this platform, through which it also conducts its monetary policy operations. The broad array of participants, the high degree of standardisation, and the fact that interbank trades and SNB monetary policy operations in the money market are conducted on the same platform help foster market liquidity, transparency and trust among participants. The advantages of a common platform are particularly apparent in times of financial distress, when it is vital that liquidity redistribution and monetary policy operations continue to function seamlessly. The Swiss Money Market Value Chain is designed to respond rapidly to technological innovations and to market participants’ needs. Its underlying technology has been adapted and renewed on a rolling basis over the past two decades, mostly in small increments. However, larger components have also been overhauled from time to time. Four years ago, for instance, the trading platform itself was replaced. Since then, the CO:RE platform has been in use. On Page 11/13  the CO:RE platform, participants can both carry out bilateral transactions and either place or ‘hit’ quotes that are visible to all. Trading on a common platform and using standardised contracts increases market liquidity. The prices of completed transactions are visible to all participants, creating a high degree of transparency.
Whereas it is common to assume the mean is being reported – implying that respondents generate forecasts under symmetric square loss – the evidence suggests that some individuals’ forecasts are biased away from the mean, suggesting forecasting using an asymmetric loss function. Heterogeneity in loss aversion would contribute to the cross-sectional heterogeneity of inflation expectations. Moreover, asymmetric loss would generate a mean bias that will vary in size with the uncertainty of individual expectations, and hence is likely nonconstant over time. This evidence points to another potential advantage of density forecasts: their reporting may be less affected by loss aversion than simple point forecasts. BIS central bankers’ speeches  5  While there are several possible explanations for the large dispersion of inflation forecasts among consumers, this heterogeneity is typically higher than that observed in various surveys of professional forecasters. In closing, I would like to speculate on a few potential reasons as to why the dispersion measured among professional forecasters may be too low relative to a “true” dispersion in expectations. First, asymmetric incentives may induce a desire to conform. If professional survey respondents have beliefs that are far from the consensus, they might face an asymmetric payoff: a small positive payoff for being correct, but a decidedly negative payoff for being incorrect. This may cause a tendency to converge on a consensus belief.