policy ) envisaged by a central bank. by contrast, the second objective commits to the continuation of a more accommodative policy under the zero lower bound than would otherwise have been anticipated with the normal policy reaction function. i will further explain these objectives shortly, but one difference between them is that the impacts on financial markets – such as generating downward pressure on long - term interest rates ( and raising asset prices ) – are not necessarily intentional and present in the case of the first objective, but are always deliberately pursued as a result of the unconventional monetary policy tool in the case of the second objective. while forward guidance has attracted recent attention for the role it takes in formulating exit strategies from monetary accommodation, as is the case in the united states, my speech today focuses instead on its role in introducing and maintaining a monetary stimulus. forward guidance to clarify a normal monetary policy stance forward guidance with the first objective may be regarded as communication strategy by a central bank to inform the markets and the public about the normal policy reaction function of the monetary policy ( such as the taylor rule ). this can be classified as “ delphic forward guidance ” according to campbell et al. ( 2012 ). 2 forward guidance in this instance can take the form of ( 1 ) indirect signals about a future monetary policy stance ( for example, about a jeffrey r. campbell, charles l. evans, jonas d. m. fisher, and alejandro justiniano, “ macroeconomic effects of federal reserve forward guidance, ” brookings papers on economic activity, spring 2012 : 1 – 54. bis central bankers ’ speeches future policy interest rate path ) through publishing comments and projections on the outlook for prices and economic activity with risk balance assessments, or it can take the form of ( 2 ) direct signals through releasing the future policy interest rate numerical projections. in any case, the future policy stance of a central bank is a forecast based on the currently available information and the normal reaction function. this forecast is updated as new information becomes available. the important point here is that the central bank makes no commitment on its future monetary policy. generally, this type of guidance is used to enhance transparency and predictability for the markets and the public, so it does not necessarily affect financial markets. nonetheless, there are some cases where this guidance may favorably influence financial markets. an example of this would be a case where forward guidance results in a clearer understanding by the markets and the public of a central bank ’ s policy reaction function. they thus adjust

absorbing capacity is appropriate for the material legal entities within a large, cross - border financial institution, but also what tools we and other supervisors use to ensure such capacity exists. the roles that supervision and regulation play in addressing these issues are important. there are clear advantages to setting liquidity and capital pre - positioning requirements through regulation. regulation ensures consistency and clarity ; provides a conduit for improvement, through public notice and comment ; and offers a clear rational basis for any measures imposed. there is also a role for supervision, not just in addressing the particular conditions at a given firm, but in generating and sharing better financial stability board, “ fsb launches evaluation of too - big - to - fail reforms and invites feedback from stakeholders, ” news release ( may 23, 2019 ), https : / / www. fsb. org / 2019 / 05 / fsb - launches - evaluation - of - toobig - to - fail - reforms - and - invites - feedback - from - stakeholders /. - 7information on how stress may manifest, not just in the firm overall, but in each jurisdiction where it operates. more information sharing by home to host supervisors may help convince host supervisors that they need fewer pre - positioned resources in their jurisdiction. today ’ s workshop is a worthy step forward in discussing these issues, and towards preserving and expanding the benefits of cross - border finance. we are all ultimately responsible for creating the conditions where capital can flow freely, giving rise to genuine opportunity and sustainable growth. we should patiently and thoughtfully examine how best to create those conditions. as william penn put it, “ business can never be well done, that is not well understood : which cannot be without patience. ” 11 i look forward to engaging together, rigorously and openly, in the work ahead. william penn, some fruits of solitude in reflections and maxims ( 1682 ), 399.