Should the Fed Have a Financial Stability Mandate? Lessons from the Fed's First 100 Years

27 Pages Posted: 31 Mar 2016

See all articles by Renee Haltom

Renee Haltom

Federal Reserve Banks - Federal Reserve Bank of Richmond

Jeffrey M. Lacker

Federal Reserve Bank of Richmond

Date Written: 2015

Abstract

President Jeffrey Lacker and Research Publications Content Manager Renee Haltom explore the Fed's role in financial stability. Following the global financial crisis of 2007--08, the Fed has been given enhanced regulatory responsibilities to prevent future crises. However, most of the Fed's actions in pursuit of financial stability have historically come through emergency lending once crises are underway. The authors conclude that arguments in favor of emergency lending are based on erroneous readings of history. Instead, emergency lending may undermine financial stability, as well as the Fed's core mission of providing monetary stability.

Suggested Citation

Haltom, Renee and Lacker, Jeffrey M., Should the Fed Have a Financial Stability Mandate? Lessons from the Fed's First 100 Years (2015). Economic Quarterly, Issue 1Q, pp. 49-75, 2015, Available at SSRN: https://ssrn.com/abstract=2756943 or http://dx.doi.org/10.21144/eq1010104

Renee Haltom (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond

P.O. Box 27622
Richmond, VA 23261
United States

Jeffrey M. Lacker

Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States
804-697-8279 (Phone)
804-697-8461 (Fax)

HOME PAGE: http://www.richmondfed.org

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