policy tool – as low as it could go, the fed took further action using unconventional policy tools. these policies involved communication, providing “ forward guidance ” that the federal open market committee ( fomc ) expected to keep rates low for longer than had been expected, and also purchasing large amounts of longer - term treasury debt and other securities to put downward pressure on long - term interest rates. while these actions were extraordinary and in some respects unprecedented, they were taken because the threats posed by the crisis were also without precedent, even in the events that led to the great depression. 4 for the first time, cutting the fed ’ s policy rate to near zero proved insufficient to halt a plummeting economy ; so the fed took further action. for the first time since the great depression, our nation faced a financial panic so severe that the fed ’ s normal overnight lending to banks was not enough ; so the fed did more, using congressionally granted powers it had held but not used since the 1930s that were intended to deal with just such rare emergencies. as the congress considers proposals that will affect the conduct of monetary policy and the fed ’ s ability to respond in a crisis, i believe it is also important to recognize how effective the fed ’ s response has been. with respect to monetary policy, the unconventional policies were designed to stimulate the economy in the same way as traditional monetary policy, by lowering interest rates. these actions helped deliver highly accommodative policy, which was essential given the depth of the recession. without these steps, the slump in the labor market and the broader economy surely would have been even deeper and more prolonged, and the low wage and price inflation we are still experiencing might have turned into outright deflation. see banking act of 1935, ch. 614, 49 stat. 684 ( 1935 ). see ben s. bernanke ( 2010 ), statement before the financial crisis inquiry commission, washington, d. c., september 2 ; and ben bernanke ( 2009 ), closed session ( pdf ) of the financial crisis inquiry commission, washington, d. c., november 17. bis central bankers ’ speeches critics warned that these policies would unleash uncontrollable inflation, fail to stimulate demand, and court other known and unknown risks. after i joined the federal reserve board in may 2012, i too expressed doubts about the efficacy and risks of further asset purchases. but let ’ s let the data speak : the evidence so far is

in euro in early 2002, proved to be a success and entirely in line with the scenarios devised in consultation with all the involved parties ( the banking sector, cash - in - transit companies, the police and the army, retailers and the general public ). in france, almost 70 % of non - cash payments were in euro at the end of december 2001. since 1 january, all transactions have been conducted in euro, and no major incidents came to light, thanks to the early use of non - cash payments by the general public throughout the second half of 2001. this was also a key factor in the rapid acceptance of the banknotes and coins by the public. similar success has been witnessed in all european countries, thanks to national efforts and the co - ordination by the european commission and the eurosystem ; a month and a half after the introduction of euro banknotes and coins, more than 95 % of cash transactions in the euro area are now being carried out in euro. although the practical changeover to the euro might be considered as an outstanding achievement, we should nevertheless remain vigilant on the following issues : · first, price stability. although some increases in prices of a certain number of consumer goods have been reported, it is likely that, overall, the effect on price stability will be marginal. but consumers have to be vigilant, companies and retailers must remain responsible as regards price setting, and competition will play its part in lowering the prices in the short - to - medium term. · second, we must closely monitor the risks of counterfeiting of notes and coins : the communication campaign of the eurosystem “ the euro. our money ” was aimed at familiarising all the european citizens with their new banknotes and coins ( and their security features ) and, by doing so, it helped them to easily identify the obviously fake banknotes. all institutions concerned, both national and european, are co - operating closely to prevent and fight counterfeiting. the credibility of the eurosystem and of the single monetary policy, and the successful changeover to the euro are a major achievement. they certainly contribute to the efficient functioning of emu and to european economic and financial integration, as i will explain now. * * * emu is a balanced concept fostering economic and financial integration emu is an economically sound and well - grounded concept the usual criticism … a few years ago, it was necessary to convince a great number of sceptics, in europe as well as