s important to consider carefully the counterfactual. would countries beyond our borders really have been better off with a weaker u. s. economy? the fundamental issue is whether u. s. monetary policy has helped support our dual objectives of stable prices and maximum sustainable growth, and whether this support is consistent with a healthy global economy. moreover, it is far from clear that explicitly coordinated policy would produce better outcomes for the global economy generally, or the emes specifically. central banks have challenges enough in tailoring policies to their own domestic circumstances. i believe that it would be taking on too much to attempt to collectively fashion policy in reference to global conditions. monetary policy meant to suit everybody is likely in the end to suit nobody. similar considerations underlie the widespread move in the emerging world away from fixed exchange rate regimes. policymakers worldwide have learned that a framework capable of responding in a disciplined but flexible manner to changing domestic conditions works best over the long run. while explicit coordination looks neither feasible nor desirable, there is more that central banks in general, and the fed in particular, could do to be better global stewards. as an example, recent events demonstrate the importance of effective fed communication. it is clear in retrospect that our attempts in the spring of 2013 to provide guidance about the potential timing and pace of tapering confused market participants. in particular, markets seemed to conflate tapering with monetary policy tightening and raised their expected paths for policy rates. lately, we seem to have done better : markets now seem to understand that policy rates will likely remain exceptionally low for a considerable period of time even now that the asset purchase program has been completed. as you know, we ’ ve taken a number of steps in recent years to increase transparency and improve our communications. this includes regular press conferences following federal open market committee ( fomc ) meetings by the fed chair ; the publishing of growth and inflation forecasts of fomc participants ; and a concerted attempt to lay out the guideposts that the fomc will look at to assess progress toward our mandate. we are, though, still learning how to more effectively communicate, especially given our new and expanded set of policy instruments. a second area in which we can and must do better is safeguarding financial stability. simply put, we failed to act both early enough and decisively enough to stem the credit excesses that spawned the financial crisis and the great recession. the u. s. was not alone in this short

volatility that we saw during the so - called “ taper tantrum ” in the spring and summer of 2013 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 the 10 - year rate rising by more than 100 basis points from early may before peaking in early september. most commentary about this period 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 to me, although other factors also played a role. 1 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 was picking up. the subsequent market movements as investors withdrew funds from eme investments were an abrupt shock for these emes generally, especially after the long earlier period of abundant liquidity and ample inflows. bis central bankers ’ speeches from one perspective, the unconventional nature of recent u. s. monetary policy adds little that is fundamentally new to the challenges that face the emes. these policies simply represent a way of easing, necessitated 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. this time should not be fundamentally different. but, from another perspective, we have less experience operating with unconventional monetary policy, and this creates more potential uncertainties. these uncertainties put a premium on keen listening skills on our part and continued dialogue both among central bankers as well as between central bankers and the market. in my view, it is important to recognize that our large scale asset purchase programs affect the size of term risk premia globally. this new set of monetary policies affects financial asset prices in a different way compared to changes in short - term interest rates, and we should be humble regarding what we claim about our understanding of the importance of this distinction. looking ahead, it seems likely that markets will remain focused on vulnerabilities that they might have ignored prior to the taper tantrum in 2013. the greater premium on strong fundamentals, policy coherence and predictability will likely remain. there will be no one right