For example, the Federal Reserve’s experience suggests that such information was helpful in evaluating the availability of credit in the early 1990s, when some banks’ lending was constrained by their limited capital (Bernanke and Lown, 1991; Greenspan, 1994). More generally, monetary policy is certainly aided by the anecdotal information on regional economic conditions that Reserve Bank business and community contacts, including numerous bankers, provide.
Many of these contacts are fostered by the extensive interaction between the Reserve Banks and the banks in their Districts. The Federal Reserve’s oversight of the payments system is another critical central banking function. In contrast to the situation in some other countries, the Federal Reserve lacks explicit legal authority to oversee systemically important payments systems.