The combination of expansionary U.S. monetary and fiscal policies following the 2001 recession and high savings rates in East Asia generated significant global imbalances, massive capital flows, and the “conundrum” of very low, long-term interest rates. These low, risk-free rates, in turn, fed the search for yield and excessive leverage across the system.
Among other achievements, the UAB has emerged as a key international and regional participant in developing policies that promote financial stability, economic integration, and sustainable development and prosperity. The UAB has also been a champion of sharing best practices and training among regulators and bankers. The partnership that has developed between the Federal Reserve and the UAB may be counted among these successes.