A Practical Viewpoint on Financial System Resiliency and Monetary Policy; 05.18.18; Third Annual ECB Macroprudential Policy and Research Conference, European Central Bank, Frankfurt, Germany

The work being undertaken at the ECB, other central banks, and universities has increased our knowledge and understanding about the interlinkages between the macroeconomy and financial systems. It has been nine years since the financial crisis, and the global economy has improved substantially over that time. In the U.S., the economy is near both of our monetary policy goals of maximum employment and price stability, and the outlook is one of the most favorable we have seen in a long time. As we move further from the crisis, one lesson can never be lost: the importance of maintaining a resilient financial system for a healthy economy. Today, I?ll spend my time discussing monetary policy and macroprudential policy from the practical perspective of a U.S. monetary policymaker. Research informs our policy decisions, but at the end of the day, decisions have to be made in a world that doesn?t match our models and without full information. Research can be elegant, practice rarely is, but when we are setting policy, effectiveness is what we strive for. Before I continue, I should note that the views I?ll present are my own and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.