This last condition effectively represents the dividing line between lender-of-last-resort actions on one hand and capital injections or other forms of unsecured lending on the other hand, a critically important dividing line the Federal Reserve carefully respected in all its actions over the course of the crisis. One lesson that emerges from this and later phases of the crisis is that while the Federal Reserve’s authority and accountability for the 13(3) actions taken in March 2008 and throughout the crisis were well established under the Federal Reserve Act, what was crucially lacking was a public transparency regime that would allow the public to immediately track and understand the details of the extraordinary action taken. The complexity of creating a robust, responsible and safe transparency regime in the midst of rapid change and extreme market fragility notwithstanding, the fact that the public transparency of the central bank might lag the actions being taken by the central bank creates its own set of risks. In fact, the importance of transparency keeping pace with actions was actually the main theme of Greenspan’s 1996 speech, where, just as an aside, he had coined the phrase irrational exuberance. One paragraph in particular seems particularly prescient: “If we are to maintain the confidence of the American people, it is vitally important that, excepting the certain areas where the premature release of information could frustrate our legislated mission, the Fed must be as transparent as any agency of government.
Opportunities that not only profit businesses, but that enable private enterprise to help solve real world problems confronting society today – including poverty, climate change and growing inequality. As you can imagine, worrying about risks is in the DNA of central banks given our mandates to promote monetary and financial stability. So the idea of innovative risk management itself would typically set off alarm bells within the Bank, and probably among a number of you in this room. But in reality, we are living in a world where exceptional conditions exist. Monetary and financial 1/5  BIS central bankers' speeches  conditions that prevailed since the Global Financial Crisis have increased financial risks. Thanks to globalisation, regulatory and political developments have a far wider international reach. And social media that has become deeply ingrained in our daily lives has led to a world described in the latest Global Risk Report by the World Economic Forum as “a world without common facts and objective truth”. Innovative risk management is therefore not just about allowing businesses to take on more risks in a responsible way. It is as much about strengthening our defences against new and emerging risks. And perhaps, most importantly, it is about providing businesses with the confidence to move beyond the present to embrace and build a better future. For many organisations, current approaches to risk management are likely to be already severely deficient in this new environment.