their markets are sound and subject to adequate supervision, whether by home or host authorities. banks operating imprudently and without proper supervision are the ones most likely to mismeasure their risks, misprice their products, and disrupt the markets. detecting and deterring such institutions does not require us to have uniform regulatory or supervisory systems, but it does require a certain level of cooperation and coordination and a material level of consistency in our regulatory regimes. our experience in the united states suggests that achieving an appropriate convergence takes time, not only to develop but to maintain. progress we have seen through the european union and the bis goes far in coordinating, or harmonizing, banking laws, regulations, and operating standards, but that ’ s just a start. as managers of large financial institutions develop more sophisticated and more comprehensive risk management systems, they are paying less attention every day to the peculiar legal structure of their organizations. as regulators, we need to understand how banking organizations manage and control risks and the full implications of their practices for the financial safety of depository institutions. by doing so, we can do much to protect our own interests while still recognizing and accommodating the business needs of banks. in developing our laws and regulations we need to work together, for sure. but perhaps more importantly, we need to understand the market forces and incentives that banks face. if we keep those factors in mind in developing our individual rules, we may go far in developing regulatory systems that are both compatible among countries and less intrusive to the institutions we oversee.

point above the committee ’ s 2 percent longer - run goal, and longer - term inflation expectations continue to be well anchored. ” 2 an advantage of the new formulation, relative to the previous date - based guidance, is that it allows market participants and the public to update their monetary policy expectations more accurately in response to new information about the economic outlook. the new guidance also serves to underscore the committee ’ s intention to maintain accommodation as long as needed to promote a stronger economic recovery with stable prices. 3 the second type of nontraditional policy tool employed by the fomc is large - scale purchases of longer - term securities, which, like our forward guidance, are intended to support economic growth by putting downward pressure on longer - term interest rates. the federal reserve has engaged in several rounds of such purchases since late 2008. last september the fomc announced that it would purchase agency mortgage - backed securities at a pace of $ 40 billion per month, and in december the committee stated that, in addition, beginning in january it would purchase longer - term treasury securities at an initial pace of $ 45 billion per month. 4 these additional purchases of longer - term treasury securities replace the purchases we were conducting under our now - completed maturity extension program, see board of governors of the federal reserve system ( 2012 ), “ federal reserve issues fomc statement, ” press release, december 12. the numerical values for unemployment and inflation included in the guidance are thresholds, not triggers ; that is, depending on economic circumstances at the time, the committee may judge that it is not appropriate to begin raising its target for the federal funds rate as soon as one or both of the thresholds is reached. the 6 - 1 / 2 percent threshold for the unemployment rate should not be interpreted as the committee ’ s longer - term objective for unemployment ; because monetary policy affects the economy with a lag, the first increase in the target for the funds rate will likely have to occur when the unemployment rate is still above its longer - run normal level. likewise, the committee has not altered its longer - run goal for inflation of 2 percent, and it neither seeks nor expects a persistent increase in inflation above that target. see board of governors of the federal reserve system ( 2012 ), “ federal reserve issues fomc statement, ” press release, september 13 ; and board of governors, “ fomc statement, ” december 12, in note 2. bis central bankers ’ speeches which lengthened the maturity