belief is that those in europe and asia have been net sellers of credit protection, particularly with respect to north american borrowers. such credit flows, whether within or outside the banking system, should help enhance the geographic diversification of the protection - seller and add liquidity to the debt offerings of the reference firms. by distributing risks more broadly among the major players - banks, insurance companies, hedge funds, and private asset managers - these transactions would seem almost by definition to add to the diversity and strength of financial markets and reduce risk concentrations. by their design, derivative instruments segment risk for distribution to parties most willing to accept them. a key point, however, is that these parties are also able to do so by successfully absorbing and diffusing any subsequent loss. in any event, reducing or more evenly redistributing the risk within the banking system - where such credit risk has been traditionally concentrated - would seem to be a clear benefit. a second question that is certainly of interest to you as risk management professionals is whether participants recognize and understand the underlying risks. it is important to recognize that the market for credit default swaps is dominated by large institutions and private investors that have specialized expertise in credit analysis and significant historical performance records. participants will always adjust their positions and move in and out of markets as they gain experience, and there will certainly be lessons to learn along the way. we will learn them, and hopefully we will deal with them well - as we have so far. but we have little evidence, to date, that suggests there are material weaknesses in the knowledge and understanding of the major market - making dealers. that said, i would offer one critical caveat regarding the potential for a large group of market participants to place an over - reliance on external ratings and key modeling assumptions. in particular, the pricing and risk management of the increasingly complex credit risk transfer instruments and trading strategies rely on credit risk models and supporting assumptions, including assumptions about the degree of default correlations between different reference entities. although these future correlations cannot be measured, correlations during periods of normal conditions can change greatly during periods of stress. time will tell how robust these models are and whether they will perform well. market participants must consider whether there is a concentration of reliance on a small set of risk management frameworks or approaches in the credit risk transfer ( crt ) market. this issue arises in regard to the reported similarity of credit risk models and assumptions used by major market participants. of course, there is nothing

should and do factor in risks on either side of these projections in our policy deliberations. monetary policy given this outlook for the u. s. economy, we decided at our march meeting that the current stance of monetary policy is appropriate. 2 the federal funds rate is now in the broad range of estimates of neutral - - the rate that tends neither to stimulate nor to restrain the economy. our baseline economic projections see economic growth for the year as a whole running somewhat above the committee's median estimate of its longer - run trend and core pce inflation remaining near our 2 percent objective. for these reasons, we have indicated we can be patient as we assess what adjustments, if any, will be appropriate to the stance of monetary policy. at our march meeting, the committee also released revised balance sheet normalization principles and plans, and it announced that the fomc intends to slow the runoff of our securities starting in may and to cease the runoff entirely in september. 3 this decision is the culmination of discussions that we had over the previous four meetings about our operating framework and reflects our desire to converge to a balance sheet that is no larger than it needs to be to conduct 1 / 2 bis central bankers'speeches monetary policy efficiently and effectively. in september, reserve balances likely will remain above the minimum level, including a buffer, consistent with this goal. in that case, we anticipate we will likely hold the size of our balance sheet at the level reached in september for a time thereafter and let the gradual increase in other ( nonreserve ) liabilities, such as currency, slowly shrink the level of reserves. importantly, with this decision on the size of our balance sheet now taken, we can turn our attention in future meetings to discussing and deciding on the maturity composition of our system open market account portfolio. as you may know, last november the federal reserve announced that in 2019 we are undertaking a system review of our monetary policy strategy, tools, and communications practices. information about this review can be found on the federal reserve board's website. 4 in this review, we will listen to a broad range of stakeholders at public events held around the country, and we will draw on their insights as we assess how best to achieve and maintain maximum employment and price stability in the most robust fashion possible. taking these viewpoints on board, the fomc will begin its own discussions this summer on how we might refine our framework, and we will provide a public assessment