to support our economy ’ s trend of growth, and closely examine changes in real economic and financial stability conditions, we will need to judge carefully the necessity of any adjustment in the degree of accommodation. in this process we will have to devote special care to making sure that potential financial system risks, such as the buildup of household debt and the possibility of capital outflows, do not materialize. in order to operate our monetary policy effectively, accurate assessment and forecasting of financial and economic conditions are essential. and on the basis of this we will have to maintain consistency in our policy - making, while formulating the directions for our monetary policy operations from a medium - term perspective and communicating on them with the market. while devoting efforts to the efficient operation of our monetary policy, we will not hesitate to provide advice on pending economic issues overall. short - term policy responses to the risks facing us mentioned earlier are of course important, but when looked at from a long - term 1 / 3 bis central bankers'speeches perspective i believe that the work of resolving the structural vulnerabilities in our economy is a task that cannot be delayed any longer. through in - depth research we will have to precisely diagnose the urgent economic issues before us, seek viable responses to them, and consistently propose these to the policy authorities. to enhance our monetary policy ’ s effectiveness we will need to reconsider our policy framework and instruments. taking into account the changes in the relationship between growth and prices, as well as the importance of the central bank ’ s role in financial stability, we will have to deliberate deeply on measures to facilitate efficient operation of our inflation targeting system. since there is a possibility that, together with the drop in our potential growth rate, the scope for our base rate operations will become narrower than previously, it will be necessary from a medium - to longterm perspective to also devise measures for securing our policy capacity. we will have to respond actively to the changes in our financial environment due to the developments of fintech and new technologies such as blockchain. technological innovation these days is so rapid and complex that it is difficult to compare it with past cases. these changes do bring to us new opportunities and convenience, but they can also lead to unanticipated risks and also threaten our financial system ’ s stability. we will have to strengthen our research on the impacts that digital innovation is having on the real and financial economies, while at the same time also participating actively

the burden associated with such reporting. i can assure you, we recognize banking organizations'investment in and commitment to compliance with regulatory requirements, including those imposed by anti - money - laundering and counter - terrorism regulations. the federal reserve will continue to work with our counterparts in the federal government to encourage enhanced feedback on how reporting is contributing to our common fight against money laundering and terrorism. operational risk over the past few years, the federal reserve has been increasing its focus on operational risk. for many nonfinancial organizations, the largest share of enterprise risk is likely to be operational risk, as opposed to credit and interest - rate risk. banks have learned much from the practices that nonfinancial firms have developed over the years. operational risk has more relevance today for bankers largely because they are able to shed much of their interest - rate and credit risk through sales of loans, use of financial derivatives and sound models to manage the risks that are retained. further, the revenue streams that are growing the fastest are increasingly related to transaction processing, servicing accounts, and selling sophisticated financial products. to be successful, organizations must have complex systems to execute these activities. banks are also utilizing advanced models to estimate and manage credit - risk and market - risk exposures. growing use of sophisticated models requires stronger risk - management practices since weaknesses in the models'operational design and data integrity can lead to significant losses. thus, effective risk management requires financial institutions to have more - knowledgeable employees to identify system requirements, monitor their effectiveness, and interpret model results appropriately. we have learned quite a bit about operational risk from our examinations of banking organizations. for example, during routine examinations we look at the adequacy of banks'procedures, processes, and internal controls. such reviews include transaction testing of control routines in higher - risk activities. for example, a bank's wire transfer activities and loan administration functions are often targeted for review, and our experiences have identified some common weaknesses in operational control that are worthy of attention. with wire transfers and similar transactions, a banking organization could suffer a significant financial loss from unauthorized transfers and incur considerable damage to its reputation if operational risks are not properly mitigated. a few recurring recommendations from our reviews are to ( 1 ) establish reasonable approval and authorization requirements for wire transactions to ensure that an appropriate level of management is aware of the transaction and to establish better accountability ; establish call - back procedures, passwords, funds transfer agreements, and other authentication controls related to customers'wire transfer requests