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

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  • Renee Courtois Haltom
  • Jeffrey M. Lacker

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

  • Renee Courtois Haltom & Jeffrey M. Lacker, 2015. "Should the Fed Have a Financial Stability Mandate? Lessons from the Fed's First 100 Years," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 49-75.
    • Handle: RePEc:fip:fedreq:00028
    DOI: 10.21144/eq1010104
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    1. Arantxa Jarque & David A. Price, 2015. "Living Wills: A Tool for Curbing Too Big to Fail," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 77-94.

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