household real estate ), available at www. federalreserve. gov / releases / z1. bis central bankers ’ speeches europe ’ s difficulties have blunted what had been strong growth in u. s. exports earlier in the recovery by sapping demand worldwide. let me say a few words now, and more later, about the role of monetary policy in this recovery. the federal reserve typically plays a large role in promoting recoveries by reducing the federal funds rate and keeping it low until the economy is again on a solid footing. reducing the federal funds rate tends to reduce other interest rates and boost asset prices, thus encouraging spending and investment throughout the economy. as it has before, the federal open market committee ( fomc ) in 2007 started reducing the federal funds rate at the first signs of economic weakness and made sharper rate cuts as the recession deepened. as in some past recoveries that were disappointingly slow, the fomc has kept rates low well after the end of the recession. but unlike the past, by december 2008 the committee had reduced the federal funds rate effectively to zero. because that rate, for practical purposes, cannot be cut further, this level is referred to as the effective lower bound. without the option of using its conventional policy tool, and with the recession getting worse, the fomc decided to employ unconventional tools to further ease monetary policy, even though the efficacy of these tools was uncertain and it was recognized that their use might carry some potential costs. the better known of these tools is the purchase of large amounts of longer - term government securities, which is commonly referred to as quantitative easing. the other unconventional tool is known as forward guidance – providing information about the future path of short - term interest rates anticipated by the committee. both of these approaches are intended to address a gap caused by the effective lower bound. this gap is the shortfall between what the fomc likely would do in current economic circumstances, were it able to reduce the federal funds rate below zero, and the reality that the rate can ’ t be cut further. i believe that the federal reserve ’ s asset purchases and other unconventional policy actions have helped, and are continuing to help, fill this gap and thus shore up aggregate demand. the evidence suggests that the fomc ’ s actions have lowered short - and longer - term private borrowing rates and boosted asset prices. 7 however, while this contribution has been significant, lower interest rates may be doing less to increase spending than in

guy debelle : the global fx code of conduct address by mr guy debelle, deputy governor of the reserve bank of australia, to the thomson reuters industry event " examining the fx code of conduct ", sydney, 15 june 2017. * * * the fx global code of conduct was launched just over two weeks ago in london. it is available on the global foreign exchange committee ’ s website, www. globalfxc. org. 1 today i will reiterate the motivation for the work, highlight the main features of the code and adherence, summarise how we developed the code and outline the way forward. firstly, why has this work been necessary? the foreign exchange ( fx ) industry has been suffering from a lack of trust. this lack of trust is evident both between participants in the market and, at least as importantly, between the public and the market. the market needs to move toward a more favourable and desirable location, and allow participants to have much greater confidence that the market is functioning appropriately. the code sets out global principles of good practice in the fx market to provide a common set of guidance to the market. this will help to restore confidence and promote the effective functioning of the wholesale fx market. a well - functioning fx market is very much in the interest of all market participants. this clearly includes central banks, both in their own role as market participants but also as the exchange rate is an important channel of monetary policy transmission. in a globalised world, the foreign exchange market is one of the most vital parts of the financial plumbing. one of the guiding principles that has underpinned our work in developing the code is that the code should promote a robust, fair, liquid, open and transparent market. a diverse set of buyers and sellers, supported by resilient infrastructure, should be able to confidently and effectively transact at competitive prices that reflect available market information and in a manner that conforms to acceptable standards of behaviour. note that i am talking about all sections of the fx market : buyers, sellers and infrastructure. the work to develop the code began two years ago, in may 2015, when the bis governors commissioned a working group of the markets committee of the bis ( which i chaired until early january this year ) to do two things : first, establish a single global code of conduct for the wholesale fx market and second, to come up with mechanisms to promote greater adherence to the code. 2 this work was very much a public sector – private sector partnership.