federal reserve ’ s balance sheet and forward guidance on the target federal funds rate. any change in the size and composition of the system open market account ( soma ) decided upon by the fomc is implemented by the desk. this distinction between monetary policy formulation and monetary policy implementation is important. open market operations are merely a means to an end – tools for implementing the fomc ’ s decisions. 1 in designing these operational tools, the desk aims to effectively and efficiently implement the fomc ’ s directives. 2 of course, desk operations don ’ t take place in a vacuum. we additional policy tools related to depository institutions, such as the discount window, interest on reserves, and the term deposit facility, are overseen by the board of governors of the federal reserve system and implemented by the federal reserve banks. the fomc issues a “ directive ” to the new york fed after each of its meetings. the directive outlines the approach to monetary policy that the fomc considers appropriate for the time period between its policy meetings ( for example, its target fed funds rate or range, or an amount of long - term securities to purchase ) and authorizes the desk to conduct transactions in the soma in furtherance of it. bis central bankers ’ speeches operate in the open market, conducting transactions with a range of private market participants who are motivated by their own business needs, balance sheet constraints, regulatory incentives or disincentives, and individual perceptions of current and future economic conditions and risks. we rely on both internal and external infrastructure and systems to trade, settle, and clear our transactions. our understanding of the dynamics of the markets in which we operate – including the motivation and behavior of different market participants, linkages among financial institutions, and the microstructure of financial instruments – is therefore vital to our ability to structure and execute operations to achieve the objectives of policymakers. 3 by monitoring markets and maintaining deep expertise in them, we remain vigilant to changes in the financial market landscape that might alter our assessment of our operational toolkit. on that note, i ’ ll now turn to significant changes in u. s. money markets in recent years and their implications for the desk ’ s implementation of monetary policy. the changing landscape of u. s. money markets prior to the financial crisis, the desk met the fomc ’ s interest rate directives primarily by controlling the supply of reserves in the banking system. 4 the desk conducted open market operations to manage

contributed to the overall wellbeing of the public. monetary policy has not played a significant role in the evolution of income or wealth inequality in my home country, finland, either. forthcoming research by the bank of finland staff suggests that the transmission of monetary policy to households with different types of wealth and income profiles is rather similar to that observed in other countries. monetary easing seems to reduce unemployment most among low - income households, while also boosting the general wage level, which benefits proportionately more high - income households. however, it seems that, relative to the positive impact that monetary policy has on the macro - economy, both on growth and employment, the impact on inequality is nevertheless very small. in our neighbouring nordic country, sweden, the assessments have been similar. in the terms of reference for reviewing the riksbank ’ s monetary policy framework, the riksdag ’ s parliamentary committee on finance concluded that the distributional consequences of monetary policy since the global financial crisis have been small, and if anything, have ameliorated income differences through lower unemployment. the committee also concluded that the distributional effects were small. 2 in our review of the ecb ’ s monetary policy strategy, we have discussed the issue of inequality and the role employment should play in policymaking. of course, we adjust monetary policy depending to how the economy is doing, and labour market slack has always been an important part of that consideration. moreover, given differences in marginal propensities to consume across households, the distribution of income and wealth clearly affects the transmission of monetary policy. in the euro area, national policies determine labour market outcomes. however, monetary policy can support full employment without prejudice to price stability. in the presence of a flattened phillips curve, policies aiming at full employment are likely to have a moderate inflationary impact in the short term. under such circumstances, monetary policy can also help us get closer to full employment. in fact, considerations about labour - income and wealth inequality strengthen the case for a 2 / 3 bis central bankers'speeches “ lower for longer ” strategy, when monetary policy is constrained by the effective lower bound. this is to my understanding in line with considerations that featured prominently in the federal reserve ’ s recent framework review and have contributed also to the new ecb monetary policy strategy, of which president christine lagarde informed the public earlier today. 4. so, let me ask, on the basis of these reflections : what should one as a central banker think about inequality and inclusive