Transitory changes during an adjustment period may pose however some challenges. 3. Implications for economic activity  Let me now turn to the implications for real economic activity associated with the new regulation. There is a widespread perception that the new measures will act at the macroeconomic level as a significant negative supply shock.
For the classic discussion of financial panics and the appropriate central bank response, see Walter Bagehot ([1873] 1897), Lombard Street: A Description of the Money Market (New York: Charles Scribner’s Sons). 2  Information on the centennial of the Federal Reserve System is available at www.federalreserve.gov/ aboutthefed/centennial/about.htm. 3  The Panic of 1907 is discussed in a number of sources, including O.M.W.