In the event of a more flexible exchange rate policy in China, the sources of imports for the US would have been some countries other than China. Thus, it is most likely that the US current account deficit would have been as large as it was – only the surplus counterpart countries might have been somewhat different.
The Federal Reserve System alone, of course, cannot resolve all of the problems in the marketplace, but we have responded thus far through our regulatory, supervisory, research, and community affairs functions. Regulation and supervision As part of a periodic review of our regulations under HOEPA, the Federal Reserve Board in 2006 began a systematic look at changes in the mortgage industry.