Jan. 5, 2016

Special Issue of Richmond Fed's Economic Quarterly Revisits the Financial Crisis

Richmond, Va.

The Richmond Fed’s newly released Economic Quarterly is a special issue reprinting past Annual Report articles focusing on the financial crisis. Taken together, these essays reflect much of the thinking the Richmond Fed has done on the sources of financial instability and the means by which public policy can promote stability.

A unifying theme in the issue is that government interventions that protect creditors weaken the market discipline that might otherwise help to control risks in the financial system. This leaves the Fed with recourse only to regulatory discipline. But as diligent and conscientious as the Fed is in implementing financial regulation, our financial system will continue to face risks as financial market participants direct their innovative energies toward benefiting from perceived protection while circumventing regulatory controls. Ultimately, financial stability will be better served if we can scale back beliefs in a broad safety net and restore a measure of meaningful market discipline.

In this issue:

• The Pursuit of Financial Stability: Essays from the Federal Reserve Bank of Richmond Annual Reports by John A. Weinberg
• The Financial Crisis: Toward an Explanation and Policy Response by Aaron Steelman and John A. Weinberg
• Systemic Risk and the Pursuit of Efficiency by Kartik B. Athreya
• Should the Fed Have a Financial Stability Mandate? Lessons from the Fed’s first 100 Years by Renee Haltom and Jeffrey M. Lacker
• Living Wills: A Tool for Curbing “Too Big to Fail” by Arantxa Jarque and David A. Price

The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. More information is available at (800) 322-0565 or online.

As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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