In his survey of the range of research results, Joe Gagnon finds roughly similar median results for studies focusing on programs in the United States, United Kingdom, and euro area—citing a 4 / 13  BIS central bankers' speeches  median effect of about a 50-basis-point reduction in 10-year yields for a purchase equal to 10 percent of GDP.22 Regarding costs, in a recent exploration of strategies for defeating the zero lower bound, former Federal Reserve Chairman Bernanke dispels some of the common critiques of balance sheet programs (which he calls quantitative easing).23 He points to unrealized worries about an upsurge in inflation, collapse of the dollar, currency war, and rise in household leverage, and he questions the effects in promoting asset bubbles and inequality. He notes that fiscal risks associated with quantitative easing must be balanced against benefits of tools that enhance policymakers’ ability to meet their policy objectives in the face of a serious economic downturn or disinflation. Lesson 2: The Fed could control interest rates even with a large balance sheet An additional concern—that the Fed would not be able to control interest rates with a large balance sheet—proved to be surmountable. As I described earlier, the Fed successfully introduced new tools and counterparty relationships into a new operating regime that delivers interest rate control irrespective of the level of reserve balances in the banking system.
May I, at this point, request that we stand and observe a moment of silence in honour of our past late Governors; R C H Hallet, Valentine S Musakanya, Bitwell R Kuwani, Luke Mwananshiku and Leonard Chivuno and many other former employees of the Bank who passed away during the last 40 years. Thank you. It is important to mention here that most of the former Governors have continued playing critical roles in the financial sector and I can proudly say that three of them today serve as chairmen of commercial banks. In conclusion, Ladies and Gentlemen, may I again welcome you all to this conference, and I urge you to be open and constructive during the deliberations. I thank you. 4  BIS Review 48/2004