I am glad that we were able to have the service of Prof. Peter Sinclair of university of Birmingham who h as served as Director, Centre for Banking Studies, of the Bank of England to conduct this programme. Ladies and gentlemen, let me highlight some interesting developments in the evolution of central banking and some challenges faced by central bankers. The role of central banks has evolved over past several decades. You may recall that the original task of central banks was not the conducting of monetary policy or supporting the banking system but financing government spending. The oldest central bank of the world, the Bank of Sweden was established in 1668 largely as means to finance military spending . The Bank of England was said to have been created in 1694 to fund a war with France. Even as recently as late 1940’s a labour chancellor of the exchequer, Stafford Cripps was said to have described the Bank of England as “ his bank”. Today, it is a taboo for most central banks to finance government deficits. Most countries have managed their affairs without a central bank for a long time. At the beginning of this century there were only 18 central banks. The USA managed without a central bank until 1913. Private banks issued their own currency notes and coins and banking crises were fairly frequent. The Federal Reserve Bank of USA was established mainly to supervise banks and act as lender of last resort.
We asked: “How can the New York Fed best leverage our resources to help our community?” We heard that it could be challenging to find key recovery information and advice online. So we pulled key resources under one roof – or I should say under one URL. We developed our Sandy Information Center with the best information we could find for residents and businesses impacted by Sandy – including key deadlines along with expert legal, finance and insurance guidance. Conditions are not entirely back to normal, and restoration and repair activities continue in a number of hard-hit neighborhoods. Connecticut, along with New York, New Jersey, Maryland and Rhode Island, have been appropriated federal funding for relief efforts and this should help move the area’s recovery forward. I am confident that these areas will recover over the course of the year. The legislation also contains funding for helping coastal communities to prepare to weather future storms better. My meeting with you today is part of our continuing efforts to understand what is going on at the grassroots level of our economy. Let me offer a few examples from this trip. Yesterday evening I met with some of Stamford’s business leaders to discuss the local state of economic and business conditions. This morning I met with Mayor Finch and key economic development staff to discuss Bridgeport’s redevelopment initiatives. Local efforts such as these and your business council are essential complements to the Fed’s support for economic recovery.