Journal Article

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

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.

https://doi.org/10.21144/eq1010104

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Economic Quarterly

Publication Date: 2015

Issue: 1Q

Pages: 49-75