, downside risks from weak global demand and geopolitical events, a lower long - run neutral federal funds rate, and the apparently elevated sensitivity of financial conditions to monetary policy. uncertainty about the location of supply - side constraints provides another reason for gradualism. there are potential concerns with such a gradual approach. it is possible that monetary policy could push resource utilization too high, and that inflation would move temporarily above target. in an era of anchored inflation expectations, undershooting the natural rate of unemployment should result in only a small and temporary increase in the inflation rate. 15 but running the economy above its potential growth rate for an extended period could involve significant risks even if inflation does not move meaningfully above target. a long period of very low interest rates could lead to excessive risk - taking and, over time, to unsustainably high asset prices and credit growth. macroprudential and other supervisory policies are designed to reduce both the likelihood of such an outcome and the severity of the consequences if it does occur. but it is not certain that these tools would prove adequate in a financial system in which much intermediation takes place outside the regulated banking sector. thus, developments along these lines could ultimately present a difficult set of tradeoffs for monetary policy. 16 conclusion to wrap up, with the support of monetary accommodation, our economy has made substantial progress. my view is that a continued gradual return to more normal monetary policy settings will give us the best chance to continue to make up lost ground. see, for example, laurence ball and sandeep mazumder ( 2011 ), “ the evolution of inflation dynamics and the great recession, ” brookings papers on economic activity, ( spring ), pp. 337 – 381 ; blanchard, cerutti, and summers, “ inflation and activity ”, in note 13. see for example, jeremy c. stein ( 2013 ), “ overheating in credit markets : origins, measurement, and policy responses. ” tobias adrian and adam b. ashcraft ( 2012 ), “ shadow banking regulation ” frbny staff report no. 559, and samuel g. hanson, anil k. kashyap, and jeremy c. stein ( 2011 ), “ a macroprudential approach to financial regulation, ” journal of economic perspectives vol. 25, no. 1, both note that macroprudential tools may not be sufficient to fully address risks rising outside of the regulated banking sector. bis central bankers ’

the need for more forceful global response? since i have heard from different locations of similar concerns, we are all working at home, looking at what could be done. but it ’ s at a very premature stage because we don ’ t want to overdo it. we are in an open society, where people are free to lose money as they like. it ’ s a phenomenon that affects central banking, payment systems, banks and financial market infrastructure. by definition those activities become cross - border so a cross - border response is always preferable to a fragmented national one. in many jurisdictions there is a very high concern about money - laundering and terrorism financing. what needs to be decided here as a superpriority has to do with the level of political responsibility rather than the level of individual agencies. therefore the g20 where you also have the government side coming is a welcome forum. the second in the list of priorities is to have more information because it ’ s very difficult to have access to what is happening and where it ’ s happening. we need more information and that ’ s why for me one obligation would already be to force the unregulated platforms to report transactions in a harmonized way to repositories so that we would have access to information also in order to create a better response. i hear often that there are concerns of criminal activity and the amount of hoaxes in this virtual world is rather high. so the main concern is the absence of proper information and the absence of traces so you could track the transactions. so this is certainly something that specialized staff in different member states will also look into. your colleague benoit coeure said recently that the ecb expects g - 20 meeting in march to focus on coordinated response to the growth of digital currencies and urged leaders to come up with a regulatory answer. what are you expectations about this meeting in buenos aires? you should not think of a meeting as being a switch. it will launch a certain amount of studies, it will probably task a certain number of existing institutions to dig deeper and then we will start the work. but in the meantime we already prepare in - house. whatever happens, we want to be prepared. what can you do until this coordinated response is ready? 2 / 3 bis central bankers'speeches we have on the one hand our existing toolbox. it always is useful if you look at the toolbox again in terms of what is possible from the point of view of a new application. then