. 7 committee members, through their submissions to the summary of economic projections, had already indicated that their inflation objective was close to 2 percent as measured by the personal consumption expenditures deflator ; in january 2012 the committee formalized the inflation objective as a 2 percent “ longer run goal ” ( see http : / / www. federalreserve. gov / newsevents / press / monetary / 20120125c. htm ). bis central bankers ’ speeches another shortcoming was in our use of forward guidance with respect to the path of shortterm interest rates. although calendar - based guidance worked reasonably well in influencing expectations about the future path of short - term rates and thus the shape of the yield curve, it was clumsy in a number of respects. for example, if we moved the forward date guidance out in time, did this reflect a change in our reaction function, the amount of desired policy stimulus or greater pessimism about the outlook? of course, as we have learned, we have acted to rectify these shortcomings. for example, our asset purchases are now outcome based, tied to the goal of substantial improvement in the labor market outlook, and our forward guidance on short - term rates is tied to unemployment and inflation thresholds rather than to a calendar date. the japanese authorities have also capitalized on our joint experiences and actions. thus, we have witnessed a convergence in the monetary policy regimes of our two countries. today, the two regimes are quite similar in three important respects. both the fed and the bank of japan place considerable emphasis on an explicit inflation objective, commit the central bank to use all available tools to achieve its objectives, and use forward guidance on interest rates and large scale purchases of long duration assets as the main tools to achieve these objectives. although there are still some important distinctions in how policy is conducted, much of these relate more to differences in legal frameworks and the current starting point for economic activity and inflation rather than fundamental differences in philosophy. for example, the boj ’ s asset purchases are broader than the fed ’ s, extending to equity etfs ( exchange traded funds ) and reits. this option is not available to the federal reserve because the federal reserve act sets tighter limits as to the types of assets that the federal reserve can purchase. similarly, current circumstances in the two countries are different, with deflationary expectations still in the process of being dislodged in japan. the boj needs to push up inflation expectations

efficient resource allocation from a macroeconomic perspective, which endogenously enhances economic growth. the banker discussed here is not confined only to the literal meaning of a banker. they include investors such as venture capitalists who have an eye for assessing the businesses and risks of startups. the role of capital markets, including stock and corporate debt markets, would also be considered as the banker in a broad sense. moreover, fintech firms have begun to partly play the role of what schumpeter calls a " banker " in recent years. let me explain in more detail. taking advantage of corporate payments and commercial information as discussed, a range of commercial and financial services are now provided in an integrated manner with smartphones. commercial and financial functions are closely linked and inseparable ; this has not changed since the olden days. as banks used to provide credit mainly by discounting commercial bills, lending services were essentially incorporated into commercial businesses. that is, banks engaged in payment services with access to commercial information, which enabled them to provide credit efficiently to the economy. given payment information is derived from commercial information, the latter is more fundamental than the former. clients'commercial information is the key to better assessing their creditworthiness. in other words, ensuring access to fundamental commercial information enables even nonbanks to gain a competitive advantage in information production, and perform financial intermediation functions. indeed, fintech firms, including accounting software vendors, have started accumulating corporate commercial and payment information in recent years. a chronic labor shortage in japan has facilitated the introduction of accounting software in the corporate sector to streamline the bookkeeping process. with clients'consent, fintech firms such as accounting software vendors can access granular payment and commercial information in an efficient and instant manner. in addition, artificial intelligence and machine learning technologies help analyze data to assess clients'creditworthiness. a wider access to clients'commercial and payment information by fintech firms has led to the recent expansion of transaction lending businesses. schumpeter describes innovation as " new combinations " in his original book. fintech firms have literally achieved a " new combination " as " entrepreneurs " by incorporating accounting information processing, and credit information production, to provide transaction lending services. this new combination helps establish efficient lending frameworks that reduce costs for credit assessment, shorten screening processes, and improve the performance of credit risk models. in the meantime, meeting the demand for loans from clients is a challenge for some fintech firms that do