noted, monetary policy draws the most headlines. what is monetary policy, exactly? simply put, it consists of central bank actions aimed at influencing interest rates and financial conditions more generally. its purpose is to help foster a healthy economy. but monetary policy cannot, by itself, create a healthy economy. it cannot, for instance, educate young people, generate technological breakthroughs, make workers and businesses more productive, or address the root causes of inequality. fundamentally, the energy, ingenuity, and know - how of american workers and entrepreneurs, along with our natural resources, create prosperity. regulatory policy and fiscal policy — the decisions by the administration and the congress about how much and how the government spends, taxes, and borrows — can influence these more fundamental economic pillars. i ’ ve said what monetary policy cannot do. but what can it do? it can lean against damaging fluctuations in the economy. nearly 40 years ago, the congress set two main guideposts for that task — maximum employment and price stability. we refer to these assigned goals as our dual mandate. when the economy is weak and unemployment is on the rise, we encourage spending and investing by pushing short - term interest rates lower. as you may know, the interest rate that we target is the federal funds rate, the rate banks charge each other for overnight loans. lowering short - term rates in turn puts downward pressure on longer - term interest rates, making credit more affordable — for families, for instance, to buy a house or for businesses to expand. similarly, when the economy is threatening to push inflation too high down the road, we increase 1 / 5 bis central bankers'speeches interest rates to keep the economy on a sustainable path and lean against its tendency to boom and then bust. but what exactly do the terms “ maximum employment ” and “ price stability ” mean? does maximum employment mean that every single person who wants a job has a job? no. there are always a certain number of people who are temporarily between jobs after having recently lost a job or having left one voluntarily to pursue better opportunities. others may have just graduated and have started looking for a job or have decided to return to working — for instance, when their child starts school. this so - called frictional unemployment is evident even in the healthiest of economies. then there is structural unemployment — a difficult problem both for the people affected and for policymakers trying to address it. sometimes people are ready and willing to work, but their skills, perhaps because

strongly encourage community bankers and all of the other stakeholders who would be impacted by the creation of a cbdc to submit your comments and views to the fed by may 20, the end of the scheduled public comment period. another area of intense interest is the expansion of financial activities beyond the traditional chartered banking institution construct. we are seeing an increase in the proposal of novel charter types under consideration across the country. these changes, and the coming 2 / 3 bis central bankers'speeches availability of the fed now instant payment service, have the potential to vastly change the landscape of financial services and opportunities in the market. in anticipation of this evolution, our federal reserve banks are receiving an increased number of requests for membership and access to reserve bank master accounts from institutions with these novel charters. recognizing the importance of clarity and transparency in this space, and to facilitate and evaluate these activities in a consistent manner, the board is in the process of issuing clearer guidance around the application and review process for novel bank charters and account access at the federal reserve. i look forward to discussing these and other issues with you in just a few minutes, so i will stop there. it ’ s such a pleasure to be in person with you again at the aba ’ s conference for community banks, and i am looking forward to our conversation. 1 my views on the outlook and monetary policy are my own and do not necessarily reflect those of my colleagues on the federal open market committee. return to text 2 board of governors of the federal reserve system, " federal reserve issues fomc statement, " press release, january 26, 2022. return to text 3 board of governors of the federal reserve system, " money and payments : the u. s. dollar in the age of digital transformation " ( january 2022 ). return to text 3 / 3 bis central bankers'speeches