*  *  *  I appreciate the opportunity this morning to present the Federal Reserve's semiannual report on monetary policy. Monetary policy this year has confronted an economy that slowed sharply late last year and has remained weak this year, following an extraordinary period of buoyant expansion.
However, capital flow policies are part of the Funds surveillance and as such open to an assessment of their impact on the International Monetary System. Objectives of capital flow measures usually are to maintain monetary independence, to mitigate exchange rate pressures and to safeguard financial stability.