For example, in its conduct of monetary policy, the Federal Reserve monitors financial market developments closely and interacts regularly with the primary dealers in government securities. The knowledge thus gained has improved the Fed’s ability to understand and evaluate banks’ financial-market activities. The Fed’s capital-market expertise is also useful in the regulatory process.
However, the economic environment has changed and if we are to meet our investment requirements, a greater shareholding democracy is necessary. This is another area where private and public sector collaboration could yield dividends.