The Federal Reserve exists to serve Main Street, not Wall Street. The dual mandate objectives established by Congress – full employment and price stability – are clear on this point. There is no mention of Wall Street. At the same time, it is broadly recognized that without a well-functioning financial system it would be difficult, if not impossible, for the Federal Reserve to achieve those objectives. The Federal Reserve has evolved considerably since its inception in 1913. This evolution has been informed by lessons from past financial crises. The goal has been to make the Federal Reserve even more effective in carrying out its mission. This process of learning from experience is as critical for institutions as it as individuals. To paraphrase Winston Churchill: People always make mistakes, but only wise ones learn from their mistakes. Thank you for your kind attention. I would be happy to take a few questions. 20  8  In the case of the European Central Bank, the member national central banks are involved in policy implementation. BIS central bankers’ speeches
Once confidence had been shattered, the markets responded with brutal speed and force. Monetary authorities without a record of institutional independence and without a sufficiently clear mandate for price stability did not have the experience or credibility needed to restore confidence quickly. The crises helped bring about a fundamental reassessment of the merits of fixed but adjustable exchange rate regimes, regimes that try to exist somewhere in the middle between the opposite extremes of irrevocably fixed and purely floating. The new consensus, which you can now see in policy choices across emerging markets, is that the soft middle is fundamentally untenable for an economy that is open to cross-border capital flows. With the limited exceptions of those cases where full monetary union or a currency board is optimal, or where a fixed exchange rate can provide a nominal anchor for a disinflation strategy, the general view now is that flexible exchange rate regimes make more sense for emerging market economies. Exchange rate flexibility offers the advantage of allowing monetary policy to be directed at sustaining price stability, which in turn offers a better prospect of sustained growth. Changes in fundamental factors such as productivity growth and inevitable shocks to demand and supply require changes in relative prices, both domestically and internationally. A flexible exchange rate makes it easier for relative prices to move rapidly and effectively in the appropriate direction and so generally eases the cost of adjustment.