That is, emerging Asia and some other parts of the world could see their living standards rise a bit faster than the increase in their own productivity, for a time, if they were prepared to meet some demand through imports. Facilitating this most efficiently would of course involve, among other things, allowing exchange rates to change.
We are working hard to track the progress and effectiveness of this guidance. Before issuing the guidance, Federal Reserve staff surveyed examiners to gain a better understanding of the banks’ workout practices. Going forward, the information that we collected will serve as a baseline for assessing the impact of the supervisory guidance.