Upon becoming president of the Federal Reserve Bank of St. Louis in April 2008, I knew that a top priority would be to help design policies to cope with the severe financial crisis affecting the United States and much of the rest of the industrialized world. As the months wore on, the U.S. economy continued to face substantial turmoil. Financial markets were under unusual stress as Wall Street was racked by seismic change. Uncertainty over the future prospects for the U.S. economy caused consumers and businesses to pull back on discretionary consumption and investment spending. Doubts concerning the true value of complex securities weighed heavily on investor sentiment worldwide. The uncertain fate of housing markets kept the value of underlying mortgage assets obscured.
The Federal Reserve has continued to respond to these challenges in timely and innovative ways. Our actions have included traditional monetary policy tools, but we have also implemented many new and unconventional approaches. In fact, Federal Reserve policy has been unprecedented in many ways during this crisis. An important challenge during moments of unusual policy is this: How can new policy interventions be communicated effectively to business leaders and the general public?
During 2008, the St. Louis Fed worked continually to provide better communication concerning the financial crisis and its effects on the U.S. economy. By better communicating who we are and what services we provide, we aim to increase the flow and expand the breadth of information about the Bank. In that spirit, the theme Central to America’s Economy is not just the title of this year’s annual report; it is how we define ourselves as an institution. We are central in five key areas, which I invite you to learn more about in the pages that follow:
>> We promote stable prices and economic growth.
>> We foster a sound financial system.
>> We support the U.S. Treasury’s financial operations.
>> We provide payment services to financial institutions.
>> We advance economic knowledge, community development and fair access to credit.
Through our economic research, our web sites, our applications and our personal interactions with our audiences, our influence in these five areas reaches beyond the boundaries of the Eighth District. And, we realize that within these functions is a requirement to stay flexible to allow for innovations as economic conditions change. Our organization has innovated successfully before, and we will do so again.
Although we are living through difficult times, I believe that America will emerge stronger than ever. This crisis has stressed the point that certain activities are best performed in the public sector. The Federal Reserve provides public services to set up the private sector to be an engine of growth. That is our role. But, we must continue to evolve as the world changes around us. To address the needs of a constantly changing financial landscape, we at the St. Louis Fed will continue to provide useful, worthwhile services to all of our constituents.
Being central to America’s economy is a responsibility that we do not take lightly. Now more than ever, I believe that it is critical for this organization to innovate and communicate. And we are committed to doing both as the nation works its way through this crisis.
President and CEO
Federal Reserve Bank of St. Louis