But I think there are good reasons for believing that demand may be presently somewhat less responsive to real interest rates than usual. Uncertainty rose sharply after the collapse of Lehman Brothers and rose again during the worst of the euro-area sovereign debt crisis. Banks and highly indebted households and businesses have focussed on deleveraging and improving the resilience of their balance sheets. Under these circumstances, it would be hardly surprising if changes in the cost of borrowing have less  10  The path for the policy rate in this scenario may seem surprisingly close to that under the previous scenario, but it needs to be remembered that the real interest rate – which is what matters for demand – is nevertheless lower here because inflation is higher. 6  BIS central bankers’ speeches  traction on demand than is usually the case. Chart 5 shows the implications of assuming the interest elasticity is just a third of the size assumed in the earlier experiments. The key point is that the policy rate under a nominal income target is now kept at the zero lower bound for more than six years, even though the output gap is closed after four. That long period of low interest rates is necessary to generate enough of a fall in expected future real interest rates to boost demand today. But a world where policy is kept loose for so long after the economy is back to normal is somewhat troubling.
Singapore's faster payment system is called PayNow. It is linked to a central addressing scheme that allows money to be sent to individuals using their mobile numbers as proxies and to businesses using their unique enterprise numbers. There is no need to share details of bank account numbers to receive payments. Linking the faster payment systems of countries is an efficient way to carry over the benefits of cheap, fast, seamless payments from the domestic to crossborder arena. Singapore has been actively working to connect our PayNow with the faster payment systems of other countries. We started with Thailand's PromptPay, with a bilateral linkage launched last year, and are now completing our linkages with India's Unified Payment Interface and Malaysia's DuitNow. These linkages allow users in Singapore and our partner jurisdiction to transfer funds directly to one another's bank accounts. But such bilateral linkages are time consuming and expensive to implement. The effort to connect each payment corridor in every region is not a trivial process. As one of our industry partners put it, three countries require three bilateral links but 20 countries would require 190 bilateral links. We need a multilateral solution to efficiently link up countries' faster payment systems. 2/8  BIS - Central bankers' speeches  The BIS Innovation Hub's Singapore Centre is developing a central platform for multilateral linkages to be built on countries' existing faster payments infrastructure. If successful, it will facilitate rapid scaling-up of retail payment systems connectivity. We call it Project Nexus.