from the Federal Reserve Bank of Richmond
The year 2013 marked the 100th anniversary of the Federal Reserve Act that created the Fed. The Act was passed to address recurrent financial crises, so it is ironic that the Fed’s centennial nearly coincided with the global financial crisis of 2007–08, the worst financial crisis in generations.
Federal Reserve lending programs were prominent during the crisis, and the Fed supervised important parts of the financial sector prior to the crisis. Understandably, many policymakers and academics have been asking whether changes to the Fed’s responsibilities and authorities are needed to create a more stable financial system. But what should the Fed’s role in financial stability be?