##ist structure of our government, because representatives from different regions of the country – the various presidents – have input into fomc deliberations. at those eight meetings, the fomc decides on the level of monetary stimulus for the economy. i won ’ t get into too many details of what that term “ monetary stimulus ” means, although i ’ m more than happy to take questions about it later. for now, i ’ ll just make three high - level points. first, when the fomc changes the level of stimulus, our actions tend to push inflation – that is, the rate of growth of prices – and employment in the same direction. raising the level of stimulus puts upward pressure on both inflation and employment. lowering the level of stimulus puts downward pressure on both inflation and employment. second, the fomc ’ s actions only affect inflation and employment with a lag, usually thought to be about one - and - a - half to two years. finally, over the long run, monetary policy is the prime determinant of the overall rate of inflation in the economy, but many factors beyond monetary policy affect the long - run level of employment. what is the fomc seeking to achieve by varying the level of monetary stimulus? congress has charged the fomc with making monetary policy to promote price stability and to bis central bankers ’ speeches promote maximum employment. the fomc has interpreted the first goal, price stability, to mean keeping inflation close to 2 percent. the fomc ’ s job is to vary monetary stimulus over time to meet these mandated objectives. the remainder of my speech will take the form of a report to you about how the fomc is doing in terms of meeting these goals set for us by your elected representatives in congress. price stability i will start with price stability. again, operationally, the fomc has translated this into keeping the rate of increase of the price level – that is, the inflation rate – close to 2 percent. even more specifically, the fomc uses what ’ s called the personal consumption expenditure price index, or pce, to calculate inflation. this measure of inflation captures the rate of increase in all goods and services, including those related to food and energy. the great recession is dated as starting in december 2007. here ’ s a graph of how pce inflation has behaved since that date. the main take - away is that, since that date, the pce inflation rate has averaged

new competitors carving up the banking business between them may appear to have given way to a period of sounding out which business ideas stand to be feasible, there ’ s no getting around one simple fact. the influx of new rivals, combined with the advent of more efficient technology and a more discerning customer base, hasn ’ t exactly eased the pressure on the sector as a whole to consolidate. second, many forward - looking ideas still need to show what they ’ re made of. the entrepreneurial balancing act, as it were, is to get to the bottom of developments early on and put together a broadly balanced business franchise. blockchain technology, an innovation that has repeatedly grabbed the headlines, illustrates this challenge well. its potential for slashing costs, boosting efficiency and streamlining turnaround times, it is said, is immense. this projection comes as no surprise, seeing as blockchain does indeed promise to revolutionise ledgers and settlement processes by making accounts for financial transactions available to all parties simultaneously as original documents, so to speak, and virtually in real time. blockchain technology thus has the potential to drive down costs, reduce processing times and possibly even boost the accuracy of not just payments, but securities trading and complex contracts as well. on the other hand, blockchain applications are not a trivial matter in either technological or legal terms. whether or not this technology, on balance, is worth it for a value chain in the banking industry thus hinges on a large number of concrete questions. the particular challenge for institutions lies in the fact that successful blockchain applications and other innovations could, thanks to network effects, potentially quickly become the new standard. in other words, technology can have a disruptive impact on individual business models. that is why it is advisable to confront technological and societal change proactively and to develop a strategy. quite apart from this, the banking industry should also use the opportunity presented by digitalisation to become more profitable than before. digitalisation must on no account be reduced to a zero - sum game in which players aim to divide up a cake without changing its overall size. costs can be cut significantly in the medium term, and fees justified by innovative services. but whether it ’ s a multi - channel bank, a purely smartphone - based bank or a niche institution : as a banking supervisor, it is not my place to evaluate business models and strategies. nor do i wish to have the final say on how banks can and must be as