Spillovers from foreign countries are not confined only to conventional monetary policies, nor is the U.S. the sole source of transmission. There also is evidence that the unconventional monetary policies of the ECB and the BOJ have spilled over onto the U.S. yield curve and broader financial conditions.7 This is interesting because all three monetary areas share the characteristics of flexible currencies and capital mobility. I will now conclude with a few related comments from the U.S. perspective. The Fed’s statutory mandate, like that of other central banks, is domestic. The Federal Reserve Act states that the Fed should “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates”. Within this mandate, there are good reasons to consider the international effects of monetary and regulatory policies. The U.S. economy and the economies of the rest of the world have important feedback effects on each other, and adverse international spillovers can harm U.S. prosperity. Like other central banks, the Federal Reserve can help promote global prosperity and stability, by promoting growth and stability at home. The FOMC has taken a number of steps in recent years to increase transparency and improve communications, to effectively convey policy intentions to market participants and policymakers. The Fed has also made considerable progress in strengthening the safety and soundness of the U.S. financial system, through improved regulation and supervision of banks and a broader group of systemically important institutions.

Alberto G Musalem: International spillovers and policies Remarks by Mr Alberto G Musalem, Executive Vice President of the Integrated Policy Analysis Group of the Federal Reserve Bank of New York, at the People’s Bank of ChinaFederal Reserve Bank of New York Joint Symposium, Hangzhou, Zhejiang, China, 15 Mach 2016. *  *  *  Good morning. Thank you for the opportunity to speak here in Hangzhou about the important theme of international spillovers. By exchanging perspectives and experiences we can forge relationships and a shared understanding that can lead to better economic outcomes. I will focus mostly on the interaction of international spillovers with policy frameworks within and across countries. I will do this from the vantage point of a domestic economy experiencing foreign spillovers. I will then briefly turn to considerations from a U.S. perspective. As always, my remarks reflect my own views and not necessarily those of the Federal Reserve Bank of New York, the Federal Open Market Committee (FOMC), or the Federal Reserve System.1 International spillovers encompass a broad topic with respect to their sources and channels. Before narrowly focusing on monetary sources and associated channels, it seems appropriate to first take a broader view of the various sources. Foreign spillovers can emanate from monetary, fiscal, regulatory, currency or trade policies. Spillovers can also arise from endogenous productivity changes, from financial stability developments, and from a global financial cycle.2 The Mundell-Fleming logic remains relevant for thinking about policy options of open economies.