rates in a more continuous fashion as an extension of our conventional policy space and in a way that reinforces forward guidance on the policy rate. 18 in particular, there may be advantages to an approach that caps interest rates on for details on purchases of securities by the federal reserve, see https : / / www. federalreserve. gov / monetarypolicy / timeline - balance - sheet - policies. htm. for a discussion of forward guidance, see https : / / www. federalreserve. gov / faqs / what - is - forward - guidance - how - is - it - used - inthe - federal - reserve - monetary - policy. htm. see, for example, simon gilchrist and egon zakrajsek ( 2013 ), “ the impact of the federal reserve ’ s large - scale asset purchase programs on corporate credit risk, ” journal of money, credit and banking, vol. 45, ( s2, december ), pp. 29 – 57 ; simon gilchrist, david lopezsalido, and egon zakrajsek ( 2015 ), “ monetary policy and real borrowing costs at the zero lower bound, ” american economic journal : macroeconomics, vol. 7 ( january ), pp. 77 – 109 ; jing cynthia wu and fan dora xia ( 2016 ), “ measuring the macroeconomic impact of monetary policy at the zero lower bound, ” journal of money, credit and banking, vol. 48 ( march – april ), pp. 253 – 91 ; and stefania d ’ amico and iryna kaminska ( 2019 ), “ credit easing versus quantitative easing : evidence from corporate and government bond purchase programs, ” bank of england staff working paper series 825 ( london : bank of england, september ), https : / / www. bankofengland. co. uk / working - paper / 2019 / credit - easing - versusquantitative - easing - evidence - from - corporate - and - government - bond - purchase. see board of governors of the federal reserve system ( 2010 ), “ strategies for targeting interest rates out the yield curve, ” memorandum to the federal open market committee, october 13, available at https : / / www. federalreserve. gov / monetarypolicy / fomc - memos. htm # m2010 ; and ben bernanke ( 2016 ), - 11 treasury securities at the short - to - medium

money helps to illustrate the point i am trying to make. it remains to be seen how popular this form of payment will become in the united states, but the question of whether nonbank institutions should be allowed to issue electronic money is actively being debated in many countries. some argue that issuing money is a special bank function and that electronic money should properly remain exclusively a bank product. for the time being, however, i along with other policymakers at the federal reserve have concluded that any decision to reserve the nascent market for smart cards and other forms of electronic money as a province for banks alone might well stifle both competition and technological innovation in this area. thus, while most would agree that providing efficient payment media for small dollar transactions is a “ special ” function that banks currently perform, it does not follow that only banks should be allowed to perform the function. as a corollary, i would also say that there is not a “ special ” public purpose in constraining banks from competing in many other markets traditionally dominated by nonbank financial institutions. this is a subject which is especially topical in the united states because our domestic banks are more restricted in the business activities in which they can engage than are banks in many other countries. as you know, the federal reserve has pushed to expand banks ’ ability to compete with investment houses in underwriting securities, and the scope for u. s. banks to sell insurance - related products has also expanded recently. the third general aspect of banking that is often deemed special is the linkage between the banking system and monetary policy. of course, this is a topic that has spawned a truly vast economic literature. without venturing into this thicket, i would simply like to note as fact that through much of the 1990 - 1994 period, growth of the broad u. s. monetary aggregates such as m2 was quite at odds with historical relationships to nominal income growth. perhaps the most important factor underlying this development has been a fundamental realignment of household financial assets away from bank deposits in favor of bond and stock mutual funds and other capital market investments. this “ decoupling ” of banking system deposit liabilities and nominal gdp became so pronounced during the first half of the 1990s that the federal open market committee downgraded the status of m2 as a policy variable. today m2 remains only one of the many variables reviewed by the fomc in the course of its policy deliberations. i raise this example because financial innovations and shifts in financial structure affecting