2008. consequently, we ’ ve had to find other ways to bring monetary policy to bear, notably including techniques designed to influence longer - term interest rates. for instance, the fed, like several other central banks, has purchased longer - term securities to put downward pressure on longer - term interest rates, help ease financial conditions, and promote a stronger recovery. a significant aspect of finding innovative ways to execute our duties as a central bank in a new, more complex environment has been the ongoing revolution in communication and transparency. part of that effort has involved formally defining our goals under the mandate for maximum employment and price stability given to us by the congress. two years ago, we established 2 percent as our inflation goal, and we regularly communicate policymakers ’ views of the level of unemployment expected to correspond to maximum sustainable employment over time. additionally, our monetary policy has come to rely more heavily on “ forward guidance. ” with our short - term policy rate about as low as it can practicably go, we have sought to ease financial conditions further and provide additional impetus to the recovery by communicating both quantitatively about the likely future path of our policy rate and qualitatively about the likely evolution of our balance sheet. other central banks around the world have met the challenge of current conditions with similar innovations. and i would be remiss if i did not point out, especially with paul and alan here, that the fed ’ s recent communications innovations owe a great deal to developments like the monetary targeting framework devised under chairman volcker and the post - federal open market committee statement and qualitative forward guidance introduced under chairman greenspan. in summary, the financial crisis that the fed confronted five years ago was in many ways analogous to the panics that central banks have faced for centuries. but, at the same time, the crisis and the deep recession that followed occurred in an economic and financial environment that was certainly different, and in many ways more complex, than in the past. the federal reserve found ways to carry out its traditional central bank functions in this environment, and we are working with other policymakers, domestically and internationally, to put in place a strengthened regulatory framework that will help preserve stability in the face of the complexity, interconnectedness, and innovation in our modern financial system. one of my personal objectives since i became chairman has been to increase the transparency of the fed – to more clearly explain how our policies are intended to work and the thinking behind our decisions. as i already noted, improved

ben s bernanke : opening remarks at the ceremony commemorating the centennial of the federal reserve act opening remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the ceremony commemorating the centennial of the federal reserve act, washington dc, 16 december 2013. * * * paul and alan have me at a disadvantage. each of us was asked to reflect on our own term in office. but they have the benefit of perspective, whereas my term still has a short time to run. moreover, work on some of the federal reserve ’ s most important challenges of the past few years – notably, achieving a full economic recovery from the crisis and putting in place a new financial regulatory system – is still ongoing. nonetheless, i will offer a few thoughts on the past very eventful eight years. the federal reserve ’ s extraordinary response to the financial crisis and the great recession that followed was, in one sense, nothing new. we did what central banks have done for many years and what they were designed to do : we served as a source of liquidity and stability in financial markets, and, in the broader economy, we worked to foster economic recovery and price stability. however, in another sense, what we did was very new – it was unprecedented in both scale and scope, and it made use of a number of tools that were new, or at least not part of the standard central bank toolkit. we found that these new tools were necessary if we were to fulfill the classic functions of a central bank in the context of a 21st century economic and financial environment. when the financial system teetered near collapse in 2008 and 2009, we responded as the 19th century british essayist walter bagehot advised, by serving as liquidity provider of last resort to stressed financial firms and markets. 1 but we did so in an institutional environment that was very different, and in many ways much more complex, than the one that bagehot knew. for example, the recent crisis involved runs on financial institutions, as occurred in classic panics. but in 2008, rather than a run of retail bank deposits, the runs occurred in various forms of short - term, uninsured wholesale funding, such as commercial paper and repurchase agreements. moreover, although commercial banks suffered large losses and some came under significant pressure, the crisis hit particularly hard those nonbank institutions most dependent on wholesale funding, such as investment banks and securitization vehicles. thus, the