this in mind. we also need to be careful not to underestimate the consequences of our actions. focusing only on direct channels, the effects that one would expect to ripple back to the united states from problems in one or two emes typically look quite small. but, when all of the indirect channels of feedback are aggregated properly – which admittedly is difficult to do – the effects may be considerably larger. my point is that we tend to underestimate these feedback effects. for most of us, the market volatility of this past spring and summer still remains fresh in our minds. eme financial markets were hit hardest, with declines in equity prices, a widening in sovereign debt spreads, and a sharp increase in foreign exchange rate volatility. in the u. s., we saw a spike in treasury yields, with 10 - year rates rising by roughly 100 basis points from early may to early july, and rising by roughly another 30 basis points before peaking in early september. most commentary has focused on the shift in expectations with respect to u. s. monetary policy – and, in particular, to uncertainty about the timing and implications of fed tapering – as the catalyst for these moves. this focus seems generally right, although other factors also played a role. market participants also had to evaluate the possibility that growth in china and other emes might be slowing even as growth in the u. s. and other advanced economies bis central bankers ’ speeches was picking up. the subsequent market movements as investors withdrew funds from eme investments were an abrupt shock for emes generally, especially after the long earlier period of abundant liquidity and ample inflows. from one perspective, the unconventional nature of recent u. s. monetary policy adds little that is fundamentally new to the challenges now facing emes. these policies simply represent a way of easing, driven by our coming up against the zero lower bound. central bankers have managed differences across countries in cyclical positions and policy stances many times in the past. but, from another perspective, we have less experience operating with unconventional monetary policy and this creates more potential uncertainties. this puts a premium on continued dialogue among central bankers, between central bankers and the market, and keen listening skills on our part. in my view, the fact that our large scale asset purchase programs affect the size of term risk premia globally is important. this set of monetary policies affects financial asset prices in a different way compared to changes in short - term interest

close with a final thought. the largest problems that countries create for others often emanate from getting policy wrong domestically. recession or instability at home is often quickly exported. equally important, growth and stability abroad makes all our jobs easier. this means that there are externalities in the work we do, so that more effective fulfillment of our domestic mandates helps to bring us to a better place collectively. ensuring global growth and stability is and will remain our joint and common endeavor. this is what terry checki has worked for over his distinguished career. we have been very fortunate for his service and must carry the mantle forward. bis central bankers ’ speeches