Planning at the Fed In its briefest form, the Federal Reserve’s mission is to “foster the stability, integrity and efficiency of the nation’s financial and payment systems so as to promote optimal macroeconomic performance.” This mission derives directly from the Federal Reserve Act of 1913, which established the Federal Reserve as the nation’s central bank, and has three main elements: To formulate and conduct monetary policy toward the achievement of maximum sustainable long-term growth; price stability fosters that goal.
It is known that banks will be better incentivised to think about the long-term performance of the businesses they lend to, if they have more of their own equity at stake (i.e. more of their own skin in the game). This is why we are proposing to significantly increase the minimum capital requirements for banks operating in New Zealand28.