’ s annual central bank seminar and specialized training courses, and other federal reserve cooperative training arrangements with african central banks on bank supervision topics. participation in this gathering will hopefully only strengthen and deepen these relationships. second, the federal reserve and african central banks maintain direct operational ties through the u. s. dollar correspondent and custody accounts that many central banks in this room hold at the new york fed. african countries represent approximately one - quarter of the total number of the federal reserve ’ s foreign official accountholders, the second largest regional representation, with some very long - standing account relationships. let me speak for a moment about the role of our services to the global central banking community. the federal reserve ’ s provision of u. s. dollar account services to the global official community stems from our recognition that central banks around the world have a mutual need for correspondent banking and custody services to execute on core central banking functions in which the safety, confidentiality, and reliability of service provision is essential. given the global 1 / 2 bis central bankers'speeches role of the u. s. dollar as a reserve currency, we recognize the special role that our account infrastructure plays in supporting policy implementation by central banks around the world. as such, we devote significant attention and resources to maintaining a robust operational and risk management culture. this allows us to continue to provide these services for the benefit of the global central banking community. this brings me to the third reason why enhancing relationships with african central banks is a high priority for us, and that is the need for stronger dialogue on the evolving risk environment in cross - border payments. undoubtedly, there has been a significant shift in global perceptions of the seriousness of cyber threats across the board, be they in the realm of politics, business, finance, or the media. for financial institutions, while cyber threats at one point may have been regarded as a relatively minor cost of doing business, it is not an exaggeration to say that they are now viewed as potential existential threats, not just to individual firms but also to the broader financial system and critical infrastructures that support it. as central banks with broad mandates for financial stability, this is certainly a concern for us all. for the federal reserve, a cyber breach at one of our central bank customers last year led to authenticated yet fraudulent swift messages being sent to us to wire out substantial sums of money. while neither swift nor federal reserve systems were breached, this incident was a strong reminder that the robustness of our customers ’

policymakers, their very virtue – their simplicity – is also a significant shortcoming. policy rules, especially those with fixed values for r *, cannot capture all of the information that is relevant for policymaking. in particular, such rules do not capture the fact that the linkage between the federal funds rate and both financial markets and global conditions can be very loose and shift over time. this is a critical shortcoming because this looseness affects the stability of the relationship between monetary policy and economic outcomes. if the relationship between monetary policy, financial conditions and the real economy were tight and stable over time, then following a relatively simple and unchanging policy rule would likely generate acceptable results. however, if the transmission of monetary policy to the real economy is more variable and uncertain, as i believe it is, then monetary policy cannot be put on autopilot guided only by a fixed policy rule. as an example, one significant conundrum in financial markets currently is the recent decline of forward short - term rates at long time horizons to extremely low levels – for example, the 1 - year nominal rate, 9 years forward is about 3 percent currently. my staff ’ s analysis attributes this decline almost entirely to lower term premia. in this case, the fact that market participants have set forward rates so low has presumably led to a more accommodative set of financial market conditions, such as the level of bond yields and the equity market ’ s valuation, that are more supportive to economic growth. if such compression in expected forward short - term rates were to persist even after the fomc begins to raise short - term interest rates, then, all else equal, it would be appropriate to choose a more aggressive path of monetary policy normalization as compared to a scenario in which forward short - term rates rose significantly, pushing bond yields significantly higher. in closing, i agree with the authors that it is very much premature to accept the hypothesis that we have entered a sustained period of secular stagnation. that said, however, i do think that the real potential gdp growth rate will be lower over the medium term, held down by much slower growth of labor input and an anticipated continuation of lackluster productivity growth performance. if i am correct, this does have implications for the longer - run value of r *. my point estimate is that the longer - run value of the federal funds rate is 3½ percent, well below its long - run historical level of 4¼ percent. at the