FRBNY Executive Vice President Potter Remarks on the Role of Central Bank Interactions, Particularly in the Crisis (No Immediate Regulatory Impact, but Really Intellectually Interesting)

The Federal Reserve Bank of New York (FRBNY) Executive Vice President Simon Potter delivered a speech on the role of central bank interactions with financial markets, focusing on the operational and market monitoring responsibilities of the New York Fed Markets Group and how these responsibilities have evolved since the onset of the financial crisis. Potter then discussed his role as a research economist trying to make sense of the crisis through the prism of economic theory. He concludes by stating that economic and finance education may need to be supplemented, in that analytic rigor of the global financial and economic systems is not sufficient by itself since it must be combined with practical experience of the actual workings of the financial system. His speech is outlined below (but you really need to read it for some good background on how the FRBNY functions, including as a provider of liquidity in market crisis):

• Introductory Remarks
• Pre-Crisis Central Bank Interaction with Financial Markets
• Crisis Response: Change in Central Bank Interactions with Markets
• Lessons Learned on Market Interactions through Prism of an Economist
• Conclusion

View speech in full here (links externally to NY Fed website).