As things look now, there is considerable probability that global interest rates will remain low over a long period of time, and then monetary policy will have to find other ways of working to attain the inflation target than those we are used to, and many of the measures will have consequences for the balance sheet. We need to endeavour to attain a better analysis of how measures that have an effect through the balance sheet affect the economy and become as clear and systematic when we talk about these as we have tried to be with regard to steering interest rates. I intend to begin with a historical retrospective – focusing on the past 30 years – and to describe how monetary policy has developed over time. Then I will move on to the challenges that monetary policy has faced and that have led to the use of new tools. This takes me to the international discussions about the monetary policy toolbox, and, in conclusion, I would like to discuss what opportunities and limitations the Riksbank Inquiry’s proposed new act entails. The development of monetary policy – a retrospective Ever since central banks in the modern sense were created, their objective has been clear: to provide the economy with a payment system and with a means of payment and to ensure that the value of these funds remains stable over time.
James McAndrews: Mortgage contract design – implications for households, monetary policy, and financial stability Opening remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the “Mortgage Contract Design: Implications for Households, Monetary Policy, and Financial Stability” Conference, Federal Reserve Bank of New York, New York City, 21 May 2015. *  *  *  The views expressed in this speech are those of the author and do not necessarily reflect the views of the Federal Reserve Bank of New York or of the Federal Reserve System. Accompanying charts can be found at the end of the speech. Good morning, and welcome to the Federal Reserve Bank of New York. Today is the second and final day of our conference on mortgage contract design. We are hosting this conference, in association with the NYU Stern Center for Real Estate Finance Research, because we view mortgage design as an important policy issue, with implications for monetary policy, household finance and risk management, as well as for the structure and stability of the financial system. Mortgage debt is, by far, the largest household financial liability. According to New York Fed data 1, mortgages and home equity lines of credit make up 73 percent of U.S. household debt, amounting to $ trillion in liabilities outstanding.