that's what the bank of england. walter bagehot wrote a book about and that establish some of the doctrine of what central bankers have been doing since 200 years since. you're the lead of last resorts your you lend freely at ability rate. you stand ready to make money available when it is otherwise not. it's not a seamless progress of, for the good when you look at its history. a lot of you probably know the stories of the 1920s what happened in germany. the power of the central bankers use and it sometimes misused. so this is a prime example. after world war i there's reparation payments the german government is supposed to make. and a mannamed rudolph was the central bank for germany in the early 1920s and he saw it as his priotic duty to print money, however much was needed fund the government to meet its obligations. you can imagine how the story ends. you just print without regard what happened to the price level. it becomes an inflationary force. he had this odd obsession with physical technical job of printin

the bank of england has a three minute from bank of england. there is a charge they are to fulfill and being answerable day today heists write a letter, explaining when they missed a 2% inflation target they charged them with, explaining why they missed it and while it do better next time. ben bernanke twice nearby statue goes before capitol hill asking questions and how are you doing and why aren't you doing this picture supposed to? there's more accountability now and then 3040 years ago. is struggling, but i'm not sure there's better options. >> host: talk about how you get reporting? today want to ask you are they trying to hide behind the curtains? >> guest: they are secretive group as a whole. don't notice there's relatively few on the record, direct quotations are attributions. those who do talk in interviews the people who lead me to use information, i could not identify what organization they work for. they are more transparent in decades past and it's very much not a situation where they're comfortable in the spotlight and explaining

the bank of england, of ryder, editor of the economist wrote about this, the bank of england looked at a penalty rate. the lender of last resort, led to this man and that man. and, you know, what you find is the central bank was the mistaken history. bernanke made an academic career of it and does it not seem to have a great awareness of history of the lender of last resort in the history of the zero interest-rate policy, the great depression and what happens with hyperinflation on the great depression. >> host: pretty unusual to be in a situation where you have zero interest-rate now for almost five years and you have this great quote from alan blinder in the buck or he asks, does a normal economic lot work at zero or is it like vendors, when you get to zero gravity or 0 degrees kelvin that the world act differently? >> guest: the evidence increasingly points to the 1999 having had a point at which was what we have seen -- the fed got to 0 inches rates in december december 2008, for a half years of not knowing that. they have been trying out kinds of things to stimulate growth since t

of england, the bank of japan have. and on the one hand, you have a germany economy that's performing very well, and you have these peripherals that are struggling intensively. and how to put together a monetary policy on the one hand and a financial crisis response on the other hand that's adequate and acceptable to everyone. and i think what ended up happening for the ecb is the ecb has been a little bit like the guy who's got one foot in scalding hot water and another one in ice cold water. and on average they are doing pretty well. of necessity, that's where the ecb has been. but i think that reflects some deeper kinds of institutional problems and questions about whether it really is an optimal currency zone. >> one more point in response to what you folks have said, that i've heard athanasios and i think that and i've somewhat different view on this, we've argued our central banks, the crisis fighters of last resort. so i think adam and i would agree that the governments were not coming through. and my feeling is

of england and bank of japan have. on the one hand you have a german economy that's performing very well, and you have these peripherals that are struggling intensively. how do you put together a monetary policy on the one hand >> that's adequate and ak september septemberble to everyone. >> i think what's ended up happening for the acb, the acb has been a little bit like the guy that's got one foot in hot water and the other on ice cold water. on average, they're doing pretty well. of necessity, that's where the ecb has been. but i think that refleblgts fle reflects some deeper kinds of problems and questionable whether it really is an optimal currency zone. >> one more point in response to what you folks have said, that i've heard -- and i think adam and i have a somewhat different view on this. we've argued are central banks the cry sisz fight isis fighter resort. my feeling is that the only thing worse than the central bank being the crisis fire of last resort is got being the crisis fire of last resort. given the

sheet the same way as the fed or the bank of england. why? because they don't have a sovereign market as a whole so when we criticize, some people are criticize basically for not buying greek debt for example and this would be like asking the federal reserve to use expansion of monetary policy in united states by buying detroit parts and puerto rico parts and i'm not sure how this policy would have gone if this is what you're suggesting to the central bank rate in the case of the acb, the acp used is broader collateral framework to essentially give cheap money, virtually sterile interest-rate money with long-term and they could have done more. i agree with adam that ecb policy could then more expansionary. one indicator of that is just looking at the balance sheet of the ecb that unfortunately in my view was allowed to decline over the past year. at the same time where it a balance sheets have actually accelerated with the qe infinity as i understand what the problem going into the stratosphere. quantitative easing has been affected. it'

is basically the governors of the bank of england from the bank of france, european central bank, salon, india, brazil and the bis general manager. that's the elite meeting where i think a lot of the discussions have gone on about cordoning the response to the global financial crisis. there's 18 of them at that in the find and on the 18th floor. a fabulous diamond. it has views over friends and switzerland and germany. it's very global. the next day there's the global economy meeting. that's 30 countries. and vignette countries like turkey and the philippines and indonesia will attend the as was the 15 or 18 that were there the previous night. they sit around the table and another 15 countries are allowed to attend the meeting but are not really supposed to speak unless it's really, really urgent. countries like hungary, for example, or macedonia. they are allowed to attend but they don't talk. sorry, i think macedonia is not allowed to attend because the final 15, the third division, they're not allowed to attend. they just have to hang around. but they are allowed to attend the launch

the bank of england from the british government. having central bankers appointed by elected officials created by elected officials i think and being answerable day-to-day. bernanke has to write a letter to the federal -- he has written quite a few explaining why he did this and why he will do that her next time. bernanke twice a year by statute and probably more often than that goes to congress and they ask him a lot of question and why aren't you doing what you are supposed to? there's a lot more accountability now then there was 30 or 40 years ago. it's still not a democracy and is troubling but i'm not sure there are a lot of better options. >> host: tell options. >> host: tell us ukel bit about how you did the reporting in the book. did you ask central bankers to explain what they did to you? >> guest: those that do talk you will notice they are are relatively few in the wreck or did direct quotations from people and attributions of this person that said that this happened. those that do talk often will do so on a background ba

living in london as a member of the bank of england monetary policy committee. when you came back to the united states did you have a somewhat different perspective? >> well, only on one key issue. i think in the u.s. economy actually does have more room to run than ed argued. i believe there's a demand back. i think monetary policy is making a difference, and private sectors demand is quite strong, except for what government is taking out with sequester and such. that the thing were i would agree with ned and why think people outside the u.s. have a different perspective is that we do believe, leaside and many others do, the natural rate of unemployment has risen. i sit less about a short-term innovation of them although i worry about that, and more as a result of us having had so much long-term unemployment for so long that that creates its own problem. it makes it harder to get back in the workforce. so i agree with ned at a agree with a lot of foreign observers that the labor market is more permanently damaged than some of the people of the fed thing. but ot

the bank of england releases some information as well. but it was pretty solid that we don't want to be release the information about the meetings. it's a juggling act. powerful people meeting in secret are not going say i'll tell you everything we talked about. pressure is being put on them. it's happening. t a kind of, you know, it's a very pressure. terrorist a shift in about institutions around the world on social media and what happened in the arab spring and the occupy movement. people are demanding accountability nowadays. i feel the bis needs to adapt to that. >> i want to open the discussion to the whole room. just a housekeeping reminder, if you could wait for the microphone to come to you before you start speaking. and normally we ask everyone to say who they are. since the cameras -- not everybody wants to say that. you can say i'm roger rob rabbit. and i want to mention this. not are all on the record. please feel free, if you would like to tweet using #political forum. and@worldpolicy. do we have a question? >> hi, i'm bill.

of england, bank of france. and india and brazil. dis general manager. that is the elite meeting where a lot of the discussions have gone on about coordinating the response to the global financial crisis. those are 18 of them in that. of fine dining room on the 18th floor. at fabulous dining room. use of france and switzerland and germany. very global as befits a global institution. the next date that is the global economy meeting, and that is 30 countries, and then you have countries like turkey and the philippines and indonesia that will attend as well as the 15 or 18 that would have the previous night. and they sit around the table. in another 15 countries are allowed to attend the meeting but are not really supposed to speak unless it is really, really urgent. countries like hungary, for example, or macedonia. they are allowed to attend, but they don't talk. or no -- actually, macedonia is not allowed to attend. the final 15, the third division, they're not even allowed to attend a global economy meeting. th

and as the governor of the bank of england said today, it's on the road to recovery. >> all the shows is how out of touch he is. and he's even out of touch with his own office for budget responsibility figures. because what they showed is that by 2015, people will be worse off than they were in 2010. because prices have been rising faster than earnings under him. and why is this happening? it's because he told us the economy would be growing. he told us the economy would be growing, but the truth is it has been flat-lining. will be acknowledged that it's his failure to get growth which means we're having a falling, not rising living standards in this country? >> first of all, i would remind him that inflation is lower under this government than what we inherited from labour. it has been cut in half from its peak but, of course, it is question is have you had to take difficult decisions to deal with the deficit, to get on top of the problems that we face, to reform welfare, to clean up our banks, you betcha we've had to take difficult decisions. but no one, no one in this country is in

entrance of the banks, the funding for lenny seen from the bank of england, i think it is having an effect at lowering interest rates. we are reforming but we're also offering infrastructure guarantees, something the treasury has never done before, to help projects go ahead. >> thank you nothing is more important than the caring people delivering it. does the prime minister agree that raising the bar, elevating their space will help us teach the profession to poor parenting to children the best possible start in life? >> i think my honorable friend is right and i would pay tribute to what the department of education produced yesterday in terms of the whole series of proposals to expand to fit the and the affordability of childcare, while also making sure there's a real quality over there but i think we look across europe and we see countries that have very good and very affordable childcare, there are lessons we can learn from them, and to those who say that changing the ratios are wrong, i would say look at the races and countries like denmark or france. we are coming in line to those and

the bank of japan but more specifically to the bank of england i think he said before the select committee of oversight that his main emphasis will be on the huge managerial challenge to get bank supervision back into the integrated functioning combined with the intellectual challenge that we have this feeling we need it macro credential instruments to do with credit and asset prices but we don't know what it is yet and those are the two things. and i think and i hope they can come up with great qualifications because god knows we need it but i've a feeling no central bank will have the answer and tell the experiment. >> it did do work on for word guidance and the fed has subsequently done that. is that something that he will bring with him? >> i don't think it matters i am very much of a skeptic and i think there has spent a combination like a the it distinguish columbia colleagues and desperation of central bankers what we are doing is not working and we need another tool so these statements are treated and talked about as though they were independents easing although we spent the last 3

in december the fdic and the bank of england released a joint paper providing an overview of the work we have been doing together. in addition the fdic and the european commission have agreed to establish a joint working group to discuss resolution and deposit insurance issues common to our respective jurisdictions. the first meeting of the working group will take place here in washington next week. finally, in light of concerns raised about the future of community banking and the aftermath of the financial crisis, as well as the financial impact of the various rule makings under the dodd/frank act, the fdic engaged in a series of initiatives during 2012 focusing on the challenges and opportunities facing community banks in the united states. in december of last year the fdic released the fdic community banking study, a comprehensive review of the u.s. community banking sector covering the past 27 years of data. our research confirms the important role the community banks play in the u.s. financial system. although these institutions account for just 14% of the banking assets in the u

our judgment has been since supported by the imf, the bank of england. i propose to change that judgment three months later. mr. deputy speaker, i have representation of the budget for measures that would add 33 billion pounds a year extra to borrowing on top of the figures i've announced. it's from people to borrow less is to borrow more. they would return us to the double budget deficit of the last government and give us one of the highest deficits in the western world. that would pose a huge risk to the stability of the british economy, threaten a sharp rise in interest rates, and leave the burden of debt to our children and grandchildren. and i will not take that gamble with the future of this country, especially when those representations came from the very same people who have the previous gamble with our economy lead for the mess we're clearing up in the first place. [shouting] >> be deputy speaker, the spending reduction we promise have been more than delivered. welfare reform have been legislative are taking place. here is a clear sign of progre

there are good signs as the governor of the bank of england said last night that credit conditions are easing but we need to make sure they are easing for people are trying to buy the first flat and the first of i don't have a big deposit, but don't have a lot of help from the bank of mom and dad. we need to make sure we are on their side. >> mr. jack straw. >> thank you very much, mr. speaker. the prime minister justified these very large cuts in defense spending with 5000, who are being sucked right now but on the basis he had to face some difficult decisions on expenditure. but those decisions were made in 2010. the security risks facing this country is now much worse. as he himself has acknowledged and many of his own honorable friends here. given those threats, including -- an overwhelming case for looking again at the strategic defense review and assuring that our troops have the numbers needed to justify our defensive? >> i think the right honorable gentleman makes a save point to the point is they are every five years and so there will be option to look all over again. what i w

of england can keep interest rates low. one piece of advice i won't be taking is on saturday the leader of the libby pardon city want to control borrowing but on sunday the shadow chancellor said borrowing would go up. so perhaps the leader of the labour party would admit when it is tuesday, labour would borrow more. >> ed miliband. [shouting] >> mr. speaker -- mr. speaker, last may the education secretary said, and i quote, work will begin immediately on 261 projects under the priority school building program. can the prime minister delta house how many have begun? >> what i can tell him is infrastructure spending under this government has been higher than it was under labour. we have around 14 billion pounds reserved for capital spending on our schools. we have had to clear up the appalling mess left by the building schools of the future program. >> ed miliband. >> i don't think he knows the answer, mr. speaker. i'll tell him the answer. the answer is, 261 schools were promised, only one has started. now perhaps you can e

the bank of england has a financial policy committee as well as a monetary policy committee, and the financial policy committee has a slightly different membership than the monetary policy committee. the chairman -- the governor of the central bank is the chairman of both, of both committees. and the financial policy committee has the responsibility by law for supervising the entire financial system. and we're going to have to watch how that works. that takes me over to the second set of questions that olivier asked which is are we better equipped to deal with the next crisis. and the answer is we are better equipped if the areas we've dealt with and helped set up improved systems. but the harder answer is that it's very hard to know until you do a lot of stress tests and that the ultimate stress test is, in fact, what reality throws your way. it's hard to be sure. i think, for example, of the fact that the financial authority set up by the british in 1997 -- which was very elegantly done -- convinced many people that this was the way to go. that was what you should do, a financial s

then governor of the bank of england made a series of speeches warning of the over leveraged financial system that had grown so big and complex nobody knew the risks of what lay and also predicting fiscal recession the chief economist at the imf spoke at jackson hole of the dangers of the irresponsible risk taking and in all three cases they were either derided or ignored by the global economic establishment and again this is from psychology. i don't know how many of those in the audience are watching but if you ever go up the psychology offered important advice don't go in a big group. those groups of more than four are more likely to suffer fatalities so this is slightly unexpected you with that more people the safer you were but a group think and the social pressure of the shared goal makes people who're reluctant to suggest heading back when the weather starts to turn and bad weather is the single greatest fatality of mountain climbing expedition and this dynamic was replicate in finance ministry across the board in those come with private misgivings kept to themselves in "masters

the bank of england and the federal reserve to could have a place to meet that wasn't supremely protected and inviolable. well, what does that mean? it means that this is an international organization and it is a unique hybrid in the world. it is the world's oldest global financial institution before the imf, before the world bank. it got all of the same protections for almost all of the united nations and from the moment it was set up with a national treaty, it is just almost extraterritorial in the same as the british embassy that has that level of protection. during the 1930s, the central bankers had a place where they can meet and discuss things away from politicians and the way it goes from the eyes of reporters. during the '30s, things were so secretive. there was a "new york times" reporter who did report on this for the magazine. and he said after these meetings come he wasn't even allowed into the room when it was all gone. ..

this government is by the bank of england in charge of recruiting credit in our economy. instead what we ought to be getting from him is an apology and a thank you for clearing up the mess they made. [shouting] >> sir edward lee. >> may i say to the prime minister occasionally one should be grateful, so -- [laughter] may i warmly commend him for being the first conservative prime minister ever to commit to a referendum on europe, and for leading a government that is done more than any other government to tackle welfare dependency, to reduce immigration and to bring in academies. thereby showing that -- popular and ride all the same time. [shouting] >> can i thank my honorable friend for his question, and can i on behalf of everyone in the house congratulate him on his richly deserved night it. >> here, here. >> yes, sir. dden is how so many decades and he also served in the vital role of overseeing the public accounts committee which is such important work in our parliamentary system. i am grateful what he says about the referendum and i would urge all college to come to

in the u.k., certain or large deputy governor of the bank of england made a series of speeches of an overleveraged system which grown so big complex no one knew where the risks to relay. here bertini predicted the bursting of the housing bubble on the global recession that followed. the chief economist at the imf spoke out at jackson hole of the dangers of a bonus feeling irresponsible risk-taking on a precedent of scale. in all three cases they were to write it or are by the global economic establishment and again, this is common in psychology and the listen state to be. i don't now how many in the audience are watching our big mountaineers, but if you ever go up a big mountain, the psychology literature offers some important ways. don't go in a big group. mountaineering groups of more than four are more likely to suffer fatalities. so this is slightly unexpected. you would have thought more people save for your work, decrypting and the social pressure of the shared goal makes people more effective to suggest heading back when the weather starts to turn in bad weather is the single

i think we should listen very carefully to what the governor of the bank of england said. we have said of course that growth is slower than we would like, but the economy is moving in the right direction. the rebalancing is taking place. the things that need to be fixed in our economy in terms of bank lending and housing supply, these things are being fixed. that's what this government is determined to do. >> one of my constituents has learned that when the bedroom tax is introduced she will have 24 pounds a week to live on. she is so anxious about how she's going to manage. she is having cognitive behavior therapy. but her anxiety is totally understandable. does the prime minister agree with me that those who should be receiving the cognitive behavior therapy are the ones, namely his ministers, who think she could live on 24 pounds? >> i think the party opposite does have to address the fact that for 13 years in government they were perfectly content to have a housing benefit system for people who lived in private sector housing where there was no extra benefit for empty

sir andrew large, governor of the bank of england made a series of speeches warning of overleveraged financial system which had grown bigger and complex, no one knew where the risks truly day. mary larue beanie predicted the bursting of the housing bubble and the global recession that followed. the chief economist of the imf spoke out of jackson hole of the dangers of a bonus culture fuelling irresponsible risktaking on an unprecedented scale. and all three cases they were derided or ignored by the global economic establishment and again this is common in psychology and the lessons from psychology need to be brought into economics. i don't know how many of those in the audience watching a big mountaineers but if you ever go up a big mountain the psychology of important advice, don't go in a big group. mountaineering groups of more in four are likely, more likely to suffer fatalities. this is slightly unexpected. you would have fought the more people on your mountaineering trip, grouping can the social pressure of the shared goal makes people more reluctant to suggest heading back whe

the bank of england which was created not too long after the central bank was a key part of that financial system so there is a story that walter bagehot was the 19th century economist and he wrote a book on this. it happened in 1866. there was a bank that resembles like wachovia or bank of america these banks it ran into trouble during the recent crisis and the sense that they were both had roots in the countryside and people got into high finance and it was a major force. so over -- went under one day and they tacked a piece of paper to the door saying sorry guys we are out of business. suddenly no one had faith. if overland could go under what is to stop the next bank on lombard street from going under? to have this wave of panic where suddenly assets that would be completely normally traded freely in normal times called discount bills nobody had trust that they would maintain their value and the flow of commerce shut down in the city of london so the bank of england stepped in and said our rule is to be the lender of last resort. we are going to stand here and any collateral that would

entrance of the banks, the funding for lenny seen from the bank of england, i think it is having an effect at lowering interest rates. we are reforming but we're also offering infrastructure guarantees, something the treasury has never done before, to help projects go ahead. >> thank you nothing is more important than the caring people delivering it. does the prime minister agree that raising the bar, elevating their space will help us teach the profession to poor parenting to children the best possible start in life? >> i think my honorable friend is right and i would pay tribute to what the department of education produced yesterday in terms of the whole series of proposals to expand to fit the and the affordability of childcare, while also making sure there's a real quality over there but i think we look across europe and we see countries that have very good and very affordable childcare, there are lessons we can learn from them, and to those who say that changing the ratios are wrong, i would say look at the races and countries like denmark or france. we are coming in line to those and

, a student of mine, and a junior clerk at the bank of england. tonight, i give you a fourth person, my esteemed colleague and friend, bernard lietaer. [applause] >> this is a recipe been going on for the last four our five years. the central banking terms, the chairman of the fed is known as helicopter ben. you know why that is? there were articles written about the deflation, about the deflation and n china -- sorry -- in japan during the 1990s, and seven of those were written by bernanke. so he really has focused on that issue. publish -- and in one of the several mayorals -- several articles he found the -- to stop deflation. anyway, my store on the euro is rather personal one, because actually i am being involved at the very beginning of all this. and how this happens is, quite innocently, through a book which i rather and published in 1979, which has been written in three languages, actually. this is he french version and that's the english one. the -- talks about latin america and the only book that actually forecasts the major debt crisis

andrew haldane the highly respected member of the bank of england address this in a meeting in jackson hole the summer. in a very witty speech he titled the dog and frisbee and here are some choice passages from that noteworthy speech. alt-a notes regulators quote efforts to the catch the frisbee continuous -- escalate. ever larger litters have not improved the watchdogs frisbee catching abilities. abilities. after all, no regulator had the foresight to predict the financial crisis although some have exhibited supernatural powers of hindsight. so what is the secret of the watchdogs failure he asks and he answers come for the answer is simple but rather it is complexity. complex regulation might not just be costly and cumbersome but suboptimal. in financial regulation less may be more. and listening to him speak i was reminded of the french prime minister clemons great quip as the president presented as 14 points. he said why 14? god did it in 10. [laughter] well, we only had 14 points of regulation to contend with today haldane does that dot comes against a background of escalation of

i offer mentioned the bank of england estimates the implicit today to fill global subsidy to be roughly 300 billion per year for the 29th global institutions identified by the financial stability for ecstatically important. to put that 300 per spec did, all the u.s. holding companies reported 20 living earnings of 108 billion. add to that the burdens stemming from complexity of today to fill banks. here's the basic organization chart or diagram to simplify a complex structure, one might consider all the operations other than commercial banking operation, the little box on the bottom left over my shoulder, all other operations are what you could call shadow banking affiliates, including special investment vehicles in the commercial bank. consider this next table. it gives you a sense of the size and scope of the five largest bank holding companies, noting on deposit liabilities and billions of dollars in the number of total subsidiaries in countries of operation according to the financial stability oversight council, one of boyd and grace even institutions. to put this in perspective, le

when they realize if any one of them, fdic, the bank of england, bofa in germany or swiss authorities were to try to resolve one of the their major banks, under the isda master agreement, all of the foreign counter parties to swap agreements which number as you know in the trillions, would be able to immediately close out their contracts, net it and run. they are not constrained in the way others are by a stay. secondly, they are concerned that if the u.s. were to put a major bank in resolution and shift it to a bridge bank which is what title ii permits, this bank should be very healthy but a change in control under the isda master agreement would give opportunity for the counterparty declare a default and try to act. it would also be true if they exercised a default across clause. all of these things could make it virtually impossible to resolve a large international institutions because they have huge numbers of cross-border derivatives of these kinds. what the, these resolution authorities ask is to please think about changing its laws to, its master agreements to make all of this

andrew hall dane, the highly-respected member of the financial policy committee of the bank of england, addressed this at our meeting in jackson hole this summer in a very witty speech he titled "the dog and the frisbee." and here are some choice passages from that noteworthy speech. he notes that regulators', quote: efforts to catch the frisbee have continued to escalate. an ever growing number of regulators, ever larger litters have not, however, obviously approved the watchdogs' san frisbee-catching abilities. after all, no regulator had the foresight to predict the financial crisis although some have exhibited supernatural powers of hindsight. [laughter] so what is the secret of the watchdogs' failure, he asks, and he answers: the answer is simple, or rather it is complexity. complex regulation might not just be costly and cumbersome, but suboptimal. in financial regulation less may be more. in listening to him speak, i was reminded of the french prime minister clemens' great quip after president wilson presented his 14 points. clemons said why 14? god did it in 10. [laughter] well

the seventeenth century is when the swedish bank and the bank of england began operations. there are a lot of experts on central banking and monetary policy. every country has a central bank. we are not starting from scratch. we have a lot of expertise on this and as we talk about these issues we are bringing in serious issues and people who can make good suggestions. there are a range of mandates, there are some single mandates. it is our sense the dual mandate has served us well, in particular that the fed has been able at times to speed the recovery from recession and put people back to work more quickly. we can't do anything about long run employment opportunities that we can help the economy recover more quickly. that is valuable. i would note by the way, at the current moment it doesn't matter whether we have one mandate or two because we are below our inflation target and unemployment is above where we would like to be sold both sides of the mandate i pointing in the same direction which is to provide strong accommodation to the economy to help it recover. in retrosp

before the federal reserve was created in 1913 the swedish bank was founded in 1668 the bank of england in 1694. i guess only dewey was around for those. [laughter] these early national banks evolved over many years and the institutions that we would recognize today as central banks working in the public interest. in the united states the first attempted at establishing such a national bank came in 1791 when present shins and signed legislation chartering the bank of the united states headquartered in philadelphia and under the direction of our first secretary of the treasury alexander hamilton. hamilton believed that a national bank was essential to stabilize and improve our young nation's credit standing improved handling of the financial business of the federal government under the newly enacted constitution. after hamilton left office in 1795 the secretary of the treasury oliver walcott junior informed congress of the poor state finances to provide funding need for the government walcott advised selling the government shares of stock in the bank which would end up banks limited role

month giew norman, who is governor of the bank of england in the early 20th century, reputedly lived by the motto never explain, never excuse the importance of transparency shaped fomc communication in the years before the financial crisis. next i'll relate have the financial crisis brought unprecedent canned challenges for monetary policy that required the use of unconventional policy tools including some that were barely contemplated before the crisis. communication was the centerpiece of these efforts. finally, i'll look ahead. i'm encouraged by recent signs the economy is improving and healing from the trauma of the crisis, and i expect that at some point the fomc will return to a more normal approach to monetary policy. at the the conclusion of my remarks, i'll discuss the communications challenges the fomc will face when it comes time to make that transition. fomc communication has long been the topic of great interest to me, and it's one i've worked on more directly since 2010 when chairman bernanke asked me to lead a new fomc subcommittee on communications. .. >> he's pretty

the 17th century is when the bank bank of england began operation and we know a lot about this and we know a lot of experts, a lot of them, every major country has a central bank. so we are not starting from scratch and there's a lot of people with a lot of expertise on this. we are talking about serious people who understand these issues and who can make good suggestions and there are a range of different mandates around the world. there are single mandates and dual mandate and etc. and it is our sense that the dual mandate has served us well. in particular that the fed and they have been able to speed recovery from the recession and helped the people back to work. we can't do anything about it in the long run, but we can help the economy bounce back quickly. i would also note that at the current moment that it doesn't really matter because we are below our target and we are above where we like it to be. and so this is part of the strong accommodation to help them recover. and so looking in retrospect, that is a hard question. every decision we make is done in real-time with sufficie

of england in 1694. i guess only duy was around -- dewey was around for those -- [laughter] these early national banks evolved over many years in the institutions that we would recognize today as central banks working in the public interest. in the united states, the first attempt at establishing such a national bank came which 1791 -- came in 1791 when president washington signed legislation chartering the bank of the united states head quartered in philadelphia and under the direction of our first secretary of the treasury, alexander hamilton. hamilton believed that a national bank was essential to stabilize and improve our young nation's credit standing to improve handling of the financial business be of the federal government under the newly-enacted constitution. after hamilton left office in 1795, the new secretary of the treasury, oliver walcott jr., informed congress of the state of the poor government finances -- guess that's not new, is it? walcott advised selling the government shares of stock

the bank of england states a much bigger number and the 300 billion for the internationally system of import financial institutions. but here's what i think is the fact that if you take the work of simon johnson, noted mit economist, who was the chief economist at the imf. that may discredit him in the eyes of some edition, i don't know, but as you point out all you have to do is ask a market operator, is a large institution of a funny advantage over smaller one? the answer is yes. we at the dallas fed don't know what the number is a notice under brown veteran there is an effort under those two senators us to get the geo to study a number. but i have to tell you as a former practitioner with over 25 years experience in the business having been a banker, having run financial funds, having been an investor, that there is a substantial advantage to these institutions and to just name institutions, that's like saying i bought it at neiman marcus. it tracks and brands and provides special dispensation and i believe despite industries efforts that there is a funding advantage and i believe

we have a governor of the bank of england here as well and creditors in the bank as well that were very effective and very helpful. my sense is that we have reached rapidly diminishing returns on this. i don't believe that the economy has healed sufficiently weakened the victory and say that it's the end and time to stop buying assets. the reason for stopping to buy assets is not that of the economy is in better shape but because the policy is no longer particularly effective. and at this point is these -- i would be inclined at this point but not because the economy is strong. i would be inclined to tak taper because the second necessary position which is the policy work is absent. i don't believe that it's working period. >> larry, do you want to share a view on that? if you want to filibuster, don't do it. [laughter] >> i think if ten years ago you said any economy, not just of the u.s. but the unemployment rate is going to have been 7.5% or above for something like four or five straight years, the growth would have been 2% for four or five straight years and the core inflation is st

she has a very long and distinguished career and international finance at the bank of england. that is "the washington post" and the times of london and of course the u.s. treasury department where we work together and number of years ago. and importantly her biography says she was born in washington d.c.. like me, that is also true. we have parents of reddish origin but unlike me her parents were wise enough to spend enough time in the u.k. that she picked up that wonderful accent that i unfortunately did not. you will see in the second. with that caroline. >> thanks very much matt. it does require a little bit of explanation when i show up as president obama's chauffeur and in fact the g8 david cameron said i had been wondering whose side you are really on. anyway it's a pleasure to be here this morning and i've want to exclaim to our colleagues that i was just meeting with my russian counterpart so he said that is why she is not here and i said she is why i am late. i think that goes to part of what is so valuable about the g20. i should be clear and interest because when ma

if you look at the behavior of other central banks, the bank of england over the last several years would be a case in point. will they are just as focused on both objectives, i would say, as we are. practically speaking, there isn't that much difference if any between what the feds doing and what other major central banks are doing. >> thank you. i think we're going have -- [inaudible] for the last question. i think we're out of time and kevin is going to shoot us. [inaudible] can we go long? go long. just like football. >> cnn money. among the fed watchers right now, you are considered the favorite to follow ben bernanke should he step down when the second term ends january. if that were to happen you would be the first woman to head the federal reserve in the 100 year history. i'm not going to ask you about that, i know you won't comment. [laughter] the old boy's club so does broader economic professional who is made of a third of women. i'm wondering for you can comment on -- do we need more women to lean in to economics? and lean in to the leadership positions at strang banks? -- cen

i think we should listen very carefully to what the governor of the bank of england said. we have said of course that growth is slower than we would like, but the economy is moving in the right direction. the rebalancing is taking place. the things that need to be fixed in our economy in terms of bank lending and housing supply, these things are being fixed. that's what this government is determined to do. >> one of my constituents has learned that when the bedroom tax is introduced she will have 24 pounds a week to live on. she is so anxious about how she's going to manage. she is having cognitive behavior therapy. but her anxiety is totally understandable. does the prime minister agree with me that those who should be receiving the cognitive behavior therapy are the ones, namely his ministers, who think she could live on 24 pounds? >> i think the party opposite does have to address the fact that for 13 years in government they were perfectly content to have a housing benefit system for people who lived in private sector housing where there was no extra benefit for empty

she has a very long and distinguished career in international finance at the bank of england, at "the washington post," at the times of london and, of course, at the u.s. treasury department where we worked to the a number of years -- together a number of years ago. and importantly, her biography says she was born in washington d.c. like me, that's also true. we have parents of british origin, but unlike me her parents were wise enough to spend enough time in the u.k. that she picked up that wonderful accent and i, unfortunately, did not. but you'll see in a second. so with that, caroline, please join us, thanks. >> thanks very much, matt. yes, it does require a little bit of explanation when i show up as president obama's sherpa and, in fact, the g8 david cameron said i've been wondering who side you're, you know, you're really on. [laughter] anyway, it's a pleasure to be here in this morning, and i wanted just as i was explaining to our russian colleague that i was just meeting with my russian sherpa counterpart, so we concern he said, well, that's why she's not here, and i said she

and if you look at the behavior of other banks, the bank of england over the last several years would be a case in point. they are just as focused on both objectives i would say as we are. so practically speaking, there really isn't that much difference, if any, between what the fed is doing and what the other major central banks are doing. >> thank you. i think we have an auction process in the last question. i think we're out of time, and kevin could shoot us. can we go along? go along. just like football. >> i am with cnn money. among fed watchers right now, you're considered the favorite to follow ben bernanke should he step down when his second term ends in january. if that were to happen, you would be the first woman to head the federal reserve in its 100 year history. i'm not going to ask you about that because i know you won't comment -- [laughter] but among the central banks of the world still remain an old boys club, so does broader economic concession which is made up of only about a third of women. so i'm wondering if you can comment, do we need more women to lean into eco

my biggest concern with the dodd-frank, there's a paper at the bank of england called the dog in the this become which i would highly recommend. and it's about to be detail institutions, and it basically is pointing to the approach taken in higher dodd-frank but it's also similar, the problem of the 2000 financial crisis, the hypothesis, is that they, is that they regulate and supervise didn't have enoug enough inform. didn't have enough authority to do something about it, and then even when they did they didn't do something about it. so all we need to do, give the regulars and supervisors more information, more power and tell them to be more aggressive. according to this hypothesis that's what come increased capital and liquidity means we don't have to worry about too big to fail institutions existing because they will never fail. because the government officials will be able to step in when an incompetent manager start screwing things up, and even if they don't, there will be enough of the capital to deal with it. and i just don't have the faith in government that they're going to

this government has put the bank of england in charge of regulating credit in our own economy and what we ought to be getting from him is an apology and a thank you for clearing up the mess they left. >> may i say to the prime minister one should be grateful. [laughter] may i commend him for being the first conservative prime minister ever to commit a referendum on europe for leading a government that has some more than any other government to tackle welfare dependency to reduce immigration and bring economies thereby showing that one can be conservative, popular and right at the same time. >> can i think my friend for his question and can lie on behalf of everyone in the house congratulate him on his -- he served in this house for many decades, and he also served in the vital role of overseeing the public accounts committee which does such important work in our parliamentary system. what he says about the referendum i would urge all colleagues to come to the house on july 5th and vote for this bill. >> is the prime minister proud of the fact that 300,000 more children have been pushed

they will not do major qe despite the bank of england and fed continuing. ironically their fear, because the fear of exit problems for them is so high, it is going to be, prevent them from getting in really in the first place to some extent leaving aside the obvious. this is also not going to happen right in the midst of an of a german election campaign. >> i guess just to restate it slightly differently from my point of view, i think monetary decisions are not going to be primarily driven by exchange rates, even in japan. they have already gotten the depreciation. they have locked it in and the ecb for the reasons jacob said is not going to be sacrificing other goals for exchange rate goals. obviously some smaller countries may and the question is whether the switzerlands and hong kongs and brazils and turkeys and how that plays out. that is subject we'll discuss tomorrow. i guess the thing to pick up on the exit point, there is going to be a premium on sort of reverse musical chairs. no one is going to want to be the first to tighten. even though it proba

he knew that england was so powerful because it was this fiscal military state that had a bank and a great system of finance. is he knew -- so he knew he wanted a diversified economy. and he didn't want just farming, he wanted to be a modern country. with every kind ofville activity there could -- industrial activity there could be. let madison do it, right? >> hamilton. >> let hamilton do it. when madison objected, of course, he thought long and hard about, well, was this really the right way to go. but in the end he said, yes, let's, let's absolutely do it. so that, that surprised me. it's not simply that he was a handsome guy who looked good in a uniform, but he was a -- what i say about him in the back is that he was the visionary in chief. and i came to find that. >> all right. so after -- >> and then the case of choosing hamilton over madison's objections, he's going against what you would think were his proclivities. i mean, his virginian advisers, the people who were most like him, were saying, oh, this is wrong, this is a bad guy. but he goes with the new yorker, the immigra

terry wrote in the article the bank's use of the cra, quote, help avoid delays that gum that deals between banks accused of noncompliance. some people today complain about some banks being too big. cra helped this bank grow. a valuable lesson for policymakers and the people they would govern. the more discretion you give to government the more you create the opportunity for abuse of that discretion for private gain. the more discretion you give to government the more you create the opportunity for abuse of that discretion for private gain. europe in the 18th-century was lousy with the practice. our forebears' sought to escape it and fought a revolution to get out of its grip. the tee thrown into the harbor in boston was in protest of the partnership between the british crown and a privately owned british east india company. b where a private public partnerships. j. richards -- jay richards explains some mortgage partnerships went very bad. for the partners and for all of us caught in the dust and debris of their collapse. reminded me of dick armey's morning when you enter into a partnershi