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As we have seen, the Fed has reinvented itself in the face of tremendous technological and environmental change. Indeed, this practice of reinvention is hardly new to the Fed; it has evolved and adapted to market changes throughout its history. In a sense, the Federal Reserve System was reinvented from the start, the result of a 1913 political compromise that sought to mitigate the political and public distrust for government-run banks, which had brought an end to the country's two previous attempts at central banking. Its balance of public and private missions, centralized and decentralized operations, independence from politics, and accountability to the public is unique in American history. But structure alone does not guarantee future success. Nor should it. Public expectations are high for an institution whose mission is to enhance the nation's economic well being. And, ultimately, the Fed has embraced an even broader public policy mission than is detailed in this report. Through its economic education programs and its community affairs activities, and as a corporate citizen, the Federal Reserve seeks to foster a more widespread understanding of how to achieve the maximum sustainable growth for our economy. The future legacy of the Fed rests firmly on its ability to adapt and innovate, while not losing sight of its commitment to the public interest. The Fed must continue to reinvent itself and keep up with the times. At the same time, it must carefully gauge the effect of any reengineering effort, considering the impact on its operations, on the economy and on its ability to fulfill its public policy mission. Simply put, achieving efficiency at the expense of damaging public confidence in the Fed's ability to conduct monetary policy, protect the payments system or regulate banking organizations is not an option. |