Financial market turmoil can lower output growth and limit the efficacy of the transmission mechanism concurrently. The federal funds rate, I maintain, will generally need to be lowered, and by more than in normal circumstances, to achieve an operative monetary policy rate that helps to restore the economy expeditiously to equilibrium.
And that is also the only way we can make progress in containing the “too-big-tofail” risks. 3. The banking union – an important and welcome step  In my opinion, strong institutions are the second component of good regulation. Good regulation requires more than just well-thought-out legislation; good institutions are crucial. And this brings me to the European banking union.