The Federal Reserve’s extraordinary response to the financial crisis and the Great Recession that followed was, in one sense, nothing new. We did what central banks have done for many years and what they were designed to do: We served as a source of liquidity and stability in financial markets, and, in the broader economy, we worked to foster economic recovery and price stability.
However, in another sense, what we did was very new – it was unprecedented in both scale and scope, and it made use of a number of tools that were new, or at least not part of the standard central bank toolkit.