stop of asset purchases. but concerns about financial market functioning, including the ability of markets to absorb the purchases the fed stops making, typically limits how fast the tapering can be, particularly given the amount of asset purchases we were making at the time ( $ 120 billion per month ). given the tapering criteria and subsequent data, we ultimately had to pivot hard to accelerate the tapering pace and, in fact, completed the tapering of purchases just a few - 8days before we lifted off. unlike the normalization timeline after the financial crisis, we did not have flexibility to raise the target range sooner. however, if we had less restrictive tapering criteria and had started tapering sooner, the committee could have had more flexibility on when to begin raising rates. 6 so, by requiring substantial further progress toward maximum employment to even begin the process of tightening policy, one might argue that it locked the committee into holding the policy rate at the zero lower bound longer than was optimal. my takeaway is that a less restrictive tapering criteria would have allowed more flexibility to taper “ sooner and gradually, ’ as opposed to the relatively “ later and faster ” approach that occurred. experience has shown that markets need time to adjust to a turn from accommodation to tightening, and that surely was a factor for fomc statements over the years in framing criteria for key policy actions during the recovery from the gfc and the pandemic. so, i ’ m supportive of issuing such criteria but we need to be careful to use language that allows the committee the flexibility it needs to respond to changing economic and financial conditions. now let ’ s turn to the liftoff criteria. it was also quite restrictive. the liftoff criteria required the economy to be in a situation where our dual mandate had been achieved. it can be argued that this meant getting the economy back to its 2019 state with very low unemployment and inflation near 2 percent. but the policy rate in 2019 was well above zero and close to its neutral value. consequently, if the state of the economy there are a couple of reasons why a less restrictive tapering criteria can create more policy space. first, a less restrictive tapering criteria allows policymakers to reduce the amount of purchases, perhaps more than once or even potentially end purchases, all while a more restrictive criteria may not even be triggered. second, if policymakers believe that market functioning considerations constrain the dollar amount that fed purchases can be reduced in a given month, then a policy

##ncies such as the dollar, allowing for additional regularity in price adjustment. private market processes have served this country and the world economy well to date, and we should rely on them as much as possible as we go forward. this is not to say that the official sector will have no role to play in the next global crisis, or the one after that. official safety nets and interventions cannot be eliminated entirely. there are limits to the size and extent of the shocks that the private sector can manage, at least in the short run, without official assistance. however, official financial support should be kept to a minimum for reasons of fiscal prudence, resource allocation efficiency and avoidance of moral hazard over the long run. there is, of course, in any economic system the necessity for sound monetary and fiscal policies, the absence of which was so often the cause of earlier international financial crises. with increased emphasis on private international capital flows, especially interbank flows, private misjudgments within flawed economic structures have been the major contributors to recent problems. but inappropriate macroeconomic policies also have been a factor for some emerging market economies. we may be in a rapidly evolving international financial system with all the bells and whistles of the so - called new economy. but the old economy rules of prudence are as formidable as ever. we violate them at our own peril.