On 4 February 2021, the PRA published a Dear CEO letter providing feedback on the request it made last October asking firms to provide information on their operational readiness to implement zero or negative interest rates. As highlighted in the February 2021 minutes of the Monetary Policy Committee (MPC), the Dear CEO letter sets out the timeframe for PRA authorised firms to develop tactical solutions (typically shorter-term fixes, involving workarounds on the periphery of core systems, along with overrides in downstream systems and customer communications) to implement a negative interest rate.

The Dear CEO letter is not indicative that the MPC will employ a zero or negative interest rate. The Dear CEO letter states that, as set out in the February 2021 MPC minutes, the PRA will now engage with PRA authorised firms on their development of tactical solutions, with the aim of having firms put themselves in a position to be able to implement a negative interest rate at any point after six months. The annex to the Dear CEO letter provides an overview of firms’ responses to the information request that was made in October.