This story appeared in Bank Digest.
In a speech before the Conference on “Rethinking Finance: Perspectives on the Crisis,” presented by the Russell Sage Foundation and The Century Foundation in New York City, Fed Chairman Ben Bernanke discussed the financial crisis and the Fed’s response in its capacity as liquidity provider of last resort. Bernanke based his speech on the talks and testimonies that he gave during the crisis and its aftermath, particularly his testimony to the Financial Crisis Inquiry Commission in September 2010. The Fed Chairman noted that the financial crisis of 2007-2009 was “difficult to anticipate,” but once identified was addressed to a significant extent using classic tools, including backstop liquidity provision by central banks, both here and abroad. Bernanke concluded that “to avoid or at least mitigate future panics, the vulnerabilities that underlay the recent crisis must be fully addressed” and “going forward, for the Federal Reserve as well as other central banks, the promotion of financial stability must be on an equal footing with the management of monetary policy as the most critical policy priorities.”