lael brainard : unconventional monetary policy and cross - border spillovers speech by ms lael brainard, member of the board of governors of the federal reserve system, at the 16th international monetary fund jacques polak research conference “ unconventional monetary and exchange rate policies ”, washington dc, 6 november 2015. * * * among students of central banking, the great recession will be remembered in part for the monetary policy innovation it prompted. since 2008, we have seen several episodes of extreme financial conditions in major economies. in many countries, monetary policy has shouldered a large share of the policy response. debt - deleveraging dynamics and disinflationary pressures have confronted policymakers in several economies with the classic challenge of providing accommodation when constrained by the zero lower bound. in contrast to the great depression, a number of central banks have found the “ courage to act, ” which has led to important policy innovation. while it will take many years for rigorous research to distill the lessons from this period, i will offer a few preliminary observations. 1 the effectiveness of unconventional monetary policy for much of the period since 2008, many economies, including the united states, the united kingdom, switzerland, the euro area, and japan, have been at or near the zero lower bound. many economies have experienced depressed aggregate demand and large and persistent gaps between output and potential, which have led to significant reductions in the level of policy rates in order to achieve full employment and target inflation. moreover, the neutral level of short - term risk - free rates looks to be much lower now in many countries than it had been previously. a lower neutral rate raises the likelihood that the requisite monetary accommodation when using conventional tools alone implies setting the nominal policy rate below zero. with constraints on moving nominal interest rates significantly below zero, central banks have looked to unconventional policy, such as asset purchases. the evidence suggests that unconventional monetary policy can be effective at overcoming the limitations on policy at the zero lower bound by operating through channels broadly similar to conventional monetary policy. a number of studies have suggested that the forward guidance and large - scale asset purchases conducted by the federal reserve boosted the levels of employment and inflation at a time when the level of short - term interest rates was constrained by the zero lower bound. for example, engen, laubach, and reifschneider estimate that the federal reserve ’ s forward guidance and asset purchase programs may have lowered the unemployment rate by as much as 1 – 1 / 4 percentage points and increased

for a dialogue with industry participants to ensure a well - designed regulatory regime that is effective and proportionate to the risks it addresses. the good news is that, in the future, growing global markets will present new and potentially rewarding opportunities for insurance companies. perhaps the not - so - good news is that the industry is also likely to face a multitude of challenges. the industry has made much progress in recent years. insurers and reinsurers have revised their underwriting philosophies, developed new models to assess risk, improved the adequacy of their risk profiles, and adjusted their coverage policies. many regulators have also made significant changes to ensure that their regulations keep pace with developments or, at least, do not fall too far behind. these efforts give me confidence that both firms and regulators will continue to meet the challenges that lie ahead. thank you, and i wish you all a very fruitful symposium.