trust in its pronouncements. the requirement that deeds match words has the consequence that the shaping of market expectations is not an independent instrument of policy in the long run. ii. altering the composition of the central bank ’ s balance sheet central banks typically hold a variety of assets, and the composition of assets on the central bank ’ s balance sheet offers another potential lever for monetary policy. for example, the federal reserve participates in all segments of the treasury market, with most of its current asset holdings of about $ 670 billion distributed among treasury securities with maturities ranging from four weeks to thirty years. over the past fifty years, the average maturity of the federal reserve system ’ s holdings of treasury debt has varied considerably within a range from one to four years. as an important participant in the treasury market, the federal reserve might be able to influence term premiums, and thus overall yields, by shifting the composition of its holdings, say from shorter - to longer - dated securities. in simple terms, if the liquidity or risk characteristics of securities differ, so that investors do not treat all securities as perfect substitutes, then changes in relative demands by a large purchaser have the potential to alter relative security prices. ( the same logic might lead the central bank to consider purchasing assets other than treasury securities, such as corporate bonds or stocks or for a recent appraisal of monetary policy options in japan, see bernanke ( 2003 ). 2003 fomc statements and minutes. foreign government bonds. the federal reserve is currently authorized to purchase some foreign government bonds but not most private - sector assets, such as corporate bonds or stocks. ) perhaps the most extreme example of a policy keyed to the composition of the central bank ’ s balance sheet is an announced ceiling on some longer - term yield below the prevailing rate. this policy entails ( in principle ) an unlimited commitment to purchase the targeted security at the announced price. ( to keep the overall size of its balance sheet unchanged, the central bank would have to sell other securities in an amount equal to the purchases of the targeted security. ) obviously, such a policy would signal strong dissatisfaction on the part of the policymaking committee with current market expectations of future policy rates. whether policies based on manipulating the composition of the central bank balance sheet can be effective is a contentious issue. the limited empirical evidence generally suggests that the degree of imperfect substitutability within broad asset classes, such as treasury securities, is not great, so that changes in

reasons, increasing the rate of home ownership has been a long - standing national priority. over the past decade or so, strong gains in employment, relatively low interest rates, and modest price inflation have spurred home buying across all segments of our society. in addition to favorable general economic conditions, home ownership has benefited from the introduction of new information processing technologies, including credit scoring, that have reduced the costs of obtaining a mortgage and from the introduction of a host of new, more affordable mortgage products. strong private and public support for home ownership has helped to push the national homeownership rate to 67. 8 percent in the third quarter of 2002. while rates for all groups have risen over the past decade, minority households have experienced the largest gains in home ownership. for blacks and hispanics, homeownership rates averaged 47. 5 and 48 percent, respectively, over the past year, up from rates of around 43 percent and 40 percent, respectively, a decade earlier. these trends in minority home ownership are quite positive, but more work remains to further close the substantial gap between minorities and non - hispanic whites, whose homeownership rate is above 70 percent. the role of small businesses in our economy business ownership has been another area of economic progress for minorities. the federal reserve has an ongoing interest in small businesses and their access to credit, which stems, in part, from the significant role that small businesses play in our dynamic economy. by some estimates, we have upwards of twenty - five million small businesses in the united states accounting for more than 99 percent of all firms. although a great number of these firms involve individuals who are selfemployed or who have no employees, small businesses, collectively, employ more than half the private - sector workforce and generate about three - fourths of net new jobs each year. these firms also generate more than half the sales revenues of all u. s. firms. in addition, research has consistently found that small businesses contribute vitally to the economies of urban and rural communities. the expansion of the last decade provided a favorable climate for small businesses generally and for minority - owned firms in particular. the year 2000 alone saw the creation of more than 600, 000 new firms with employees in the united states. moreover, in recent years, the number of minority - owned firms has been expanding at a rate more than four times that of u. s. businesses overall. nonetheless, minority - owned firms still constitute only a small proportion of all small businesses