, the federal funds rate target has been near zero. since the nominal funds rate cannot go below zero, we had to develop alternative policy tools in an effort to provide further accommodation to support the recovery. we also had to figure out how and what to communicate about these new tools. thus, well - understood communication practices about traditional policy tools gave way to untested ways to describe these new tools. the task was further complicated because one of the unconventional tools was so - called forward guidance. forward guidance seeks to inform the public about the future path of policy rather than describing a policy action taken today. bis central bankers ’ speeches thus, effective forward guidance is all about communication and what it conveys or doesn ’ t convey. in my brief time today, i will focus on why i think communication is such a challenge and discuss some of the choices the committee faces going forward. current state of affairs first, communication is difficult because monetary policy is more complicated than it used to be. with the traditional policy tool at the zero lower bound, the committee has focused on two unconventional tools. the first is the purchase of long - term assets, and the second, as i mentioned, is forward guidance. the asset purchase program has had many dimensions, such as the overall volume of purchases, the pace of purchases, the kinds of assets targeted for purchase, and the criteria for starting and stopping the purchases. policymakers have tried to fine - tune the program along each dimension while assessing the trade - offs among them and the trade - offs with other policy tools, such as the traditional funds rate decision. with so many moving parts to our policy framework, it is not surprising that communication is very complicated. we are now in the third round of asset purchases, or quantitative easing. since september 2012, the fomc has added some $ 1. 3 trillion in long - term treasuries and mortgage - backed securities to its balance sheet through this program, buying at a pace of $ 85 billion a month in 2013. this program, known as qe3, is already twice the size of the last round of asset purchases that was initiated in november 2010, known as qe2. in december 2013, the committee announced that it would reduce the pace of purchases from $ 85 billion to $ 75 billion per month. in january, it announced a further reduction to $ 65 billion. the fomc is now on a path of measured reductions, which, if continued, will end the purchase program late

- bank basis, as well as the level of bank preparedness to operate under basel ii. once an institution conducts a successful parallel run, the relevant primary federal supervisor would then confirm the bank's readiness and give permission for the institution to move to the first initial phase of adoption, into the initial floor period. it is only after an institution has operated to the primary supervisor's satisfaction in the parallel run and each of the three years of floors that it would be allowed to have its minimum regulatory capital requirements determined by basel ii with no floors. during u. s. implementation of basel ii, if at any stage in the process we see something that concerns the banking agencies, we will reassess and propose amendments to relevant parts of the framework. the agencies have already decided to embed in the planned timeline the possibility for a later revision to the initial basel ii rule ( before the floors are removed ), since it is expected that new information provided in the parallel run and floor years might point to a need for adjustments to that initial rule. this is entirely consistent with the path we have taken in the past regarding basel i, to which there have been more than twenty - five revisions since 1989. the federal reserve considers all of the planned safeguards and checks and balances to be sufficient for basel ii to be implemented in the united states effectively, and with no negative impact on safety and soundness or the functioning of banking markets. proposed amendments to basel i as i noted, the basel ii proposal is not the only minimum regulatory capital proposal being contemplated by the u. s. banking agencies. we have issued an anpr for amendments to basel i that is another important initiative in our efforts to update regulatory capital rules. the regulatory capital rules to be amended by the anpr would apply to thousands of banking institutions in the united states, while the basel ii proposal would likely only apply to ten to twenty at inception. the agencies are focusing considerable attention on the potential interplay between the proposed basel ii rules and the proposed basel i amendments in order to ensure that the goals for each are achieved. the federal reserve's statement pertaining to the release of the anpr highlighted that the revisions are intended to align risk - based capital requirements more closely with the risk inherent in various exposures. the anpr relates, in part, to some long - standing issues in our current capital rules that have been identified ( such as requiring capital for short - term commitments ). we also noted that the amended basel i