Financial System Resilience

Loretta Mester

Speech from Federal Reserve Bank of Cleveland

Abstract: Today I will speak about financial system resilience, its interactions with monetary policy in the context of today’s economy, and some recommendations for increasing the resilience of the banking system. In less than two decades, the world has experienced two historically deep negative shocks to the global economy and financial system. While their causes were different, the global financial crisis of 2008 and the COVID-19 pandemic that hit in 2020 each necessitated the intervention of central banks in ways not contemplated in earlier decades. This spring, the Fed was required to intervene again to address stresses in the banking system that were precipitated by the failures of Silicon Valley Bank (SVB) and Signature Bank. This stress episode was a painful reminder that whether we are operating in a low-interest-rate environment or in a high-interest-rate environment, financial system vulnerabilities can lead to adverse shocks being propagated across the financial system and sometimes very quickly. The episode also underscored that to promote financial system resilience, financial institutions must properly manage risks and supervisors must effectively monitor risks.

Keywords: financial stability; monetary policy; Financial Resilience (search for similar items in EconPapers)
Pages: 13
Date: 2023-11-29
New Economics Papers: this item is included in nep-ban and nep-mac
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.clevelandfed.org/collections/speeches/ ... al-system-resilience Full Text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcsp:97394

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Speech from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().