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1. There is clear empirical evidence that the response of EME financial markets to different shocks, including changes in U.S. interest rates, depends importantly on the state of economic fundamentals in the EMEs themselves.
2. The Federal Reserve is not charged with designing or evaluating proposals for housing finance reform. But we are responsible for regulating and supervising banking institutions to ensure their safety and soundness, and more broadly for the stability of the financial system.
3. The Federal Reserve places great importance on our relations with the Bundesbank. Few such relationships have been as important, over the decades, in promoting financial stability and prosperity around the world.
4. It is quite plausible that the process of increased fragmentation of production across borders is subject to ‘diminishing returns’ and has its natural limits.
5. In a world of global trade and integrated capital markets, it is natural for economic and financial shocks and policy actions to be transmitted across borders.
6. It is worth noting that ‘too big to fail’ is not simply about size. A big institution is ‘too big’ when there is an expectation that government will do whatever it takes to rescue that institution from failure, thus bestowing an effective risk premium subsidy. Reforms to end ‘too big to fail’ must address the causes of this expectation.
7. Although I have never worked in a community bank, I have been a customer, and I know from personal experience the special skills that these institutions bring to their customers.
8. Regional interest rate differentials persisted until around the time of World War I and helped shape the attitudes of Americans living in western areas toward the nation’s financial system.
9. The question of how to structure our nation’s financial system arose in the early years of the republic.
10. Congress created Fannie Mae in 1938 and Freddie Mac in 1970. For many years, these institutions prudently pursued their core mission of enhancing the availability of credit for housing.
11. We need a resilient, well-capitalized, well-regulated financial system that is strong enough to withstand even severe shocks and support economic growth by lending through the economic cycle.
12. Given that trade benefited the Asian economies on the way up, it seems natural that the slowdown in global trade, whatever its causes, could lead to some loss of dynamism and growth in the region.
13. The United States has never prioritized or failed to pay any obligation when due during a debt limit impasse. Despite the institutional risks and the lack of clear legal authority, we assume that Treasury will attempt to prioritize payments in a last-ditch effort to avoid default.
14. The success of monetary policy should be judged by the economy’s performance against our statutory mandates of price stability and maximum employment.
15. Emerging market economies have long grappled with the challenges posed by large and volatile cross-border capital flows.
16. The TMPG is the place where market participants recognize and address their responsibilities to each other.
17. As with so many sectors of the economy, technology is transforming the retail banking sector.
18. Perhaps the greatest challenge for the resolution of a systemic global bank is the possibility that public or private actors in different countries might take local actions that would cause the overall resolution to spin out of control.
19. Real short- and long-term rates were relatively high in the late-1990s, so financial excess can also arise without a low-rate environment.
20. Regulatory changes have forced banks to closely examine their liquidity planning and to internalize the costs of liquidity provision. The costs of committed liquidity facilities will be passed on to clearing members. These costs are perhaps highest in clearing Treasury securities, where liquidity needs can be especially large.