If the monetary authority were to commit to a program 1/3  BIS central bankers' speeches  of asset purchases until some economic objective is reached and, at the same time, were to make it clear that the policy rate would not begin to rise until the asset purchase program were completed, these steps might help anchor expectations about the likely path of short-term rates more effectively. The Federal Reserve’s third round of LSAPs, which was open-ended, was an important innovation of policy that the paper might have discussed in greater detail. I also don’t agree with the paper’s conclusions about agency MBS purchases. Such purchases do not represent “credit easing” as argued in the paper. The government’s interventions to support Fannie Mae and Freddie Mac have made it clear that there is no credit risk in the Federal Reserve’s purchase of such obligations. Also, the authors don’t acknowledge that the ability to purchase agency MBS has two benefits. First, it enables the Federal Reserve to purchase longer-duration assets at a faster pace without disrupting market functioning. This facilitates larger LSAP programs, when a larger program is viewed as necessary. Second, it opens up another channel by which asset purchases can provide stimulus—by narrowing the spread between agency MBS and Treasuries, the Federal Reserve can drive down long-term mortgage rates and provide support to the housing sector and to home prices.
The employment level and wage growth are generally good; economic expectations are high. A notable feature of the Nordic-Baltic markets is their high level of integration. Let's take the example of Estonia. Last year, Finland and Sweden accounted for about 40 percent of Estonian exports and 30 percent of imports. In the stock of FDI, the share of Sweden and Finland is about 75 percent. Cross-border financial integration is all but complete, with the market share of Nordic financial institutions accounting for 99 percent of bank loans and leasing. A long list of Nordic companies regards Estonia and the other Baltic countries as their home market. Therefore, many important business functions, for example liquidity and risk management, are increasingly run on a group-wide basis. Viewing the Baltic countries as a part of the home market, Nordic companies take a long-term business view. This lowers the risk of sudden slowdown or reversal of capital flows, often named as the main risk in the Baltic environment of strong credit growth and high current account deficits. A bit of history: entry of Nordic banks Of course this high degree of integration has been achieved over time. In the Baltic countries, today's level of economic and financial development was a distant dream as recently as 10 years ago. The fall in GDP bottomed out in mid-1990s. The following years have brought rapid output growth. In Estonia, for example, the level of real GDP has more than doubled.