But before I go on, let me remind you that the views I express are my own and may not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System. The topic of this conference may not appear particularly glamorous. It is natural to view monetary policy implementation as a technical and humble exercise next to the flashiness of policy formulation, which has policymakers determining the appropriate level of interest rates. However, for those of us charged with carrying out policymakers’ decisions, there is keen interest in the mechanics. We have the task of designing and executing operations that ensure that policymakers’ instructions are implemented effectively and efficiently, so that their intentions can affect inflation and the real economy. But while monetary policy implementation is just a means to an end, there is no obvious single “right” way to do it, and every central bank’s operating framework reflects history, unique institutional constraints and the market environment, which may change over time. So even though the topic of today’s conference may seem to lack glamour, it is significant, particularly now, since monetary policy implementation and the market landscape have undergone profound changes in recent years. Many advanced economy central banks have adopted a number of new tools to implement monetary policy or used traditional tools in new ways or in unprecedented size, in part because economic conditions have necessitated historically low interest rates that have bumped up against the zero bound for almost seven years.

We will need to think about the composition and structure of our balance sheet on both the asset and liability sides.19 This consideration will be important should large-scale asset purchases (LSAPs) become a more standard tool for central banks, which could happen if lower levels of equilibrium real rates imply an increasing frequency of very low overnight rates. Further, some analysts have argued that there might be a role for balance  16  To support the implementation of monetary policy and the analysis of money market conditions, the Federal Reserve began collecting transaction-level data on federal funds, Eurodollars, and certificates of deposits from a large set of domestic banks and agencies of foreign banks operating in the United States on April 1, 2014. In February 2015, the New York Fed announced plans to begin using the new data to calculate the daily federal funds effective rate and to begin publishing an overnight bank funding rate based on transactions in both federal funds and Eurodollar markets. See http://www.newyorkfed.org/markets/opolicy/operating_policy _150202.html and http://libertystreeteconomics.newyorkfed.org/2015/04/the-fr-2420-data-collection-a-newbase-for-the-fed-funds-rate.html. 17  A staff memo from 2008 suggested that in a floor system the level of excess reserves “might be on the order of $ billion but could be larger on some days.” For context, at the time, a number like $ billion would have been held up as an extremely large level of excess reserves, well beyond anything we might have seriously considered as the level of reserves needed to implement a floor on rates. See http://www.federalreserve.gov/foia/files/20080411.IoR.FOMC.Options.paper.public.pdf.