2008. consequently, we ’ ve had to find other ways to bring monetary policy to bear, notably including techniques designed to influence longer - term interest rates. for instance, the fed, like several other central banks, has purchased longer - term securities to put downward pressure on longer - term interest rates, help ease financial conditions, and promote a stronger recovery. a significant aspect of finding innovative ways to execute our duties as a central bank in a new, more complex environment has been the ongoing revolution in communication and transparency. part of that effort has involved formally defining our goals under the mandate for maximum employment and price stability given to us by the congress. two years ago, we established 2 percent as our inflation goal, and we regularly communicate policymakers ’ views of the level of unemployment expected to correspond to maximum sustainable employment over time. additionally, our monetary policy has come to rely more heavily on “ forward guidance. ” with our short - term policy rate about as low as it can practicably go, we have sought to ease financial conditions further and provide additional impetus to the recovery by communicating both quantitatively about the likely future path of our policy rate and qualitatively about the likely evolution of our balance sheet. other central banks around the world have met the challenge of current conditions with similar innovations. and i would be remiss if i did not point out, especially with paul and alan here, that the fed ’ s recent communications innovations owe a great deal to developments like the monetary targeting framework devised under chairman volcker and the post - federal open market committee statement and qualitative forward guidance introduced under chairman greenspan. in summary, the financial crisis that the fed confronted five years ago was in many ways analogous to the panics that central banks have faced for centuries. but, at the same time, the crisis and the deep recession that followed occurred in an economic and financial environment that was certainly different, and in many ways more complex, than in the past. the federal reserve found ways to carry out its traditional central bank functions in this environment, and we are working with other policymakers, domestically and internationally, to put in place a strengthened regulatory framework that will help preserve stability in the face of the complexity, interconnectedness, and innovation in our modern financial system. one of my personal objectives since i became chairman has been to increase the transparency of the fed – to more clearly explain how our policies are intended to work and the thinking behind our decisions. as i already noted, improved

exactly the same for all - - otherwise we would be certain to create statistical artifacts and the impression that safe harbors exist. rather, each entity should disclose what its stakeholders need to evaluate its risk profile. the uniqueness of risks and business lines in complex organizations means that some disclosures - - to be effective - - should be different. that is the approach recommended by the private - sector shipley group last year and it is the approach being taken in developing the basel ii capital accord. while comparability among firms is important, disclosure rules that are built too rigidly while risk - management processes evolve may make them less effective in describing the risk profile of a specific organization. but if bankers do not voluntarily improve disclosures, new rules will be written by accounting and regulatory authorities. indeed, we are seeing this already this year after massive accounting and disclosure problems came to light. for example, the sarbanes - oxley act requires new management certifications of the financial reports of public companies and directs the securities and exchange commission to issue new rules on disclosure of off - balance - sheet transactions. fair value accounting the fasb has stated that it believes that all financial instruments should be reported at fair value when the conceptual and measurement issues of fair value are resolved. resolution of those issues is a formidable task, especially given the nature of financial instruments held in a typical bank's loan portfolio and the nature of non - interest - bearing deposits. for example, the federal reserve has raised concerns about the potential unreliability of fair value estimates for financial instruments for which no active markets exist. the lack of reasonably specific standards for the estimation of fair values for non - traded, illiquid instruments could lead to problems for auditors and bank supervisors in verifying the accuracy of fair value estimates. we have also questioned whether the quality of financial reporting is strengthened when a firm reports increased profits as its own creditworthiness deteriorates because of the mark - to - market approach for liabilities. therefore, the federal reserve has questioned the usefulness of comprehensive fair value accounting for all financial assets and liabilities in the primary financial statements. we see benefit in fair value information as it relates to financial instruments intended to be traded or sold. nevertheless, if the purpose is to provide meaningful information that investors can use to assess bank risk profiles and performance and determine the quality of a bank's earnings, we need to ask ourselves if fluctuations in fair market values provide information leading to the transparency that we desire