In such a situation, the mean squared gap in Figure 3 would lie in a north-west to south-west direction and determining monetary policy would entail weighing up whether to stabilise one more or less than the other. BIS Review 60/2010  7  Figure 4. The mean squared gap for CPIF inflation and output and hours worked respectively. Source: The Riksbank  Figure 5: The decision-making situation for Norges Bank in 2005 Figure 5 shows the policy decision facing Norges Bank in March 2005, which is an example of a case where there was a conflict between stabilising inflation and stabilising resource utilisation. 5 The problem at that time was that the inflation forecast was under the inflation target of 2.5 per cent, so that the gap between the forecast and the target was negative, while the forecast for the output gap was positive. In such a situation, a lower repo-rate path stabilises inflation around the target better but the output gap less well, and vice versa for a higher repo-rate path. The mean squared gap then lies in a north-west to south-west direction. This case is discussed in more detail in my Umeå speech and in my chapter “Inflation targeting” to be published in a new North-Holland Handbook of Monetary Economics. 6  5  Norges Bank (2005). 6  Svensson (2010b). 8  BIS Review 60/2010  Figure 5. Monetary policy alternatives for Norges Bank, March 2005  Source: Norges Bank  Are there any arguments against an extended repo-rate path?
The EU has started on this journey by making payment and data interconnectivity between banks and non-banks mandatory, through the Payment Services Directive 2. Australia has also announced that it will legislate a national Consumer Data Right in 2018, allowing consumers open access to all their data including banking-related ones. While these hold a lot of promise by promoting consumer interests and welfare, there are other details to consider. For example, what primary data rightfully belongs to the customer, and what about secondary data about the customer that a bank had made sense of? How should a customer’s data be packaged for onward sharing? How do we develop technical standards to share this information efficiently and securely? Who should pay for these? In Singapore, we subscribe to the notion of banks sharing their data openly as a larger good. Some of the operational details have to be worked out. In MAS’ engagement with the banking industry, there is broad consensus as to the benefits of open banking. What we see is an opening up of customer data as a ground-up process led by the banks themselves. We believe this is a constructive development, that industry players themselves see the value in doing so. Role of financial regulators In my remarks so far, it should be obvious that financial regulators will have active roles in the business and technology transformation in the banking industry. Regulators need to have a sharp understanding of emerging technologies and new business models, and to be alert to potential risks.