be an efficient system. that is precisely why we should make similar arrangements for the new european supervisory mechanism, with the bundesbank performing ongoing supervision, and the ecb taking the decisions. bis central bankers ’ speeches it just so happens that, at the same time as we are holding this forum, germany ’ s federal cabinet is discussing amendments to the german banking act ( kreditwesengesetz ) today. the cabinet will consider whether changing this division of tasks and interrupting the direct reporting channel from the bundesbank to the ecb constitutes “ good regulation ”. i doubt it. i believe that the bundesbank has to be on an equal footing with the other supervisors. that is the only way to ensure effective european - level supervision. 4. conclusion and outlook ladies and gentlemen, the french writer francois fenelon once claimed that, “ the more you say, the less people remember ”. as this obviously isn ’ t my aim, i would like to conclude my remarks by taking a peek into the future. the past history of regulation has been one of constant ups and downs. periods of deregulation have usually been followed by a crisis, then followed by a period of reregulation, and again by a period of deregulation. it is precisely in phases of re - regulation that banks tend to complain about the time and money it costs – and the present period is no exception. but are we really overregulating? if we look at the benefits to society of a stable banking system and the social costs of a banking crisis, i believe the costs of regulation are justifiable. however, for the future i would like regulation to evolve somewhat more steadily and adapt more quickly to new challenges : the low - interest - rate phase, high - frequency trading, charges of manipulating the libor or the setting of forex rates and gold prices, to name just a few examples. we should not wait until the aftermath of the next crisis to come up with ways of responding to these challenges. i do not believe, however, that regulators and supervisors are all - knowing and all - powerful. as i noted at the beginning of this speech, we can only maintain financial stability if we work together. you, the bankers, are just as responsible as us, the supervisors and regulators. i am well aware that the number of “ bad apples ” is very small. however, their behaviour causes all of us to suffer : the public, when a crisis breaks

our decisions about the appropriate stance of monetary policy going forward? these questions are difficult because the interactions between monetary policy and the economy are complex. policy affects the economy through many different channels, and, in turn, many factors influence the appropriate course of policy. gauging the current stance of monetary policy requires arriving at a judgment of what would constitute a neutral policy stance at a given time. a useful concept in this regard is the neutral “ real ” federal funds rate, defined as the level of the federal funds rate that, when adjusted for inflation, is neither expansionary nor contractionary when the economy is operating near its potential. in effect, a “ neutral ” policy stance is one where monetary policy neither has its foot on the brake nor is pressing down on the accelerator. although the concept of the neutral real federal funds rate is exceptionally useful in assessing policy, it is difficult in practical terms to know with precision where that rate stands. as a result, and as i described in a recent speech, my colleagues and i consider a wide range of information when assessing that rate. 2 as i will discuss, our assessments of the neutral rate have significantly shifted down over the past few years. 1 / 8 bis central bankers'speeches in the committee ’ s most recent projections last december, most fomc participants assessed the longer - run value of the neutral real federal funds rate to be in the vicinity of 1 percent. 3 this level is quite low by historical standards, reflecting, in part, slow productivity growth and an aging population not only in the united states, but also in many advanced economies. moreover, the current value of the neutral real federal funds rate appears to be even lower than this longerrun value because of several additional headwinds to the u. s. economy in the aftermath of the financial crisis, such as subdued economic growth abroad and perhaps a lingering sense of caution on the part of households and businesses in the wake of the trauma of the great recession. it is difficult to say just how low the current neutral rate is because assessments of the effect of post - recession headwinds on the current level of the neutral real rate are subject to a great deal of uncertainty. some recent estimates of the current value of the neutral real federal funds rate stand close to zero percent. 4 with the actual value of the real federal funds rate currently near minus 1 percent, a near - zero estimate of the neutral real rate means that the stance of monetary policy remains moderately accommodative, an