In the years before the crisis, there was a growing view that the way forward for EME central banks lay in embracing the minimalist model of the advanced economy central bank. Now, with that minimalist model itself unravelling, there is a rethink among EMEs on whether that is the best way forward.
We share this concern, and last month we asked Congress to modify our mandate to permit the Fed to be more flexible on such issues as applications for new activities. At the same time, however, we believe there has been some considerable misunderstanding of our basic philosophy of holding company supervision.