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stanley fischer : the federal reserve and the global economy speech by mr stanley fischer, vice chair of the board of governors of the federal reserve system, at the conference held in honor of professor haim ben - shahar, former president of tel aviv university, tel aviv university, tel aviv, israel, 26 may 2015. * * * i am grateful to john ammer, christopher erceg, joseph gruber, and beth anne wilson of the federal reserve board ’ s staff for their assistance in preparing these remarks. i am happy to be here today, and i thank the organizers for inviting me. it is a particular pleasure to be back in israel, where my career as a central banker began. at the fed, i face a somewhat different set of responsibilities, and my lecture today is on the special challenges that face the federal reserve and the global economy in an increasingly interconnected world. 1 over the past 50 years, global trade has more than tripled relative to world gross domestic product ( gdp ), and the ratio of total exports to global gdp now stands at about 30 percent – though, interestingly, the rate of growth of global international trade has declined to the level of the growth rate of world gdp since the start of the great recession. international trade has not loomed as large in the u. s. national accounts as it has for many other countries, but it is an increasingly important driver of the u. s. economy, with the share of trade in u. s. gdp currently at about 15 percent. although the u. s. share of world gdp has gradually declined since the mid - 20th century, the broader importance of the united states to the global economy has diminished less, as a result of increasing financial linkages. in particular, u. s. residents ’ ownership of private foreign assets has risen from 6. 5 percent of u. s. annual gdp in 1950 to more than 140 percent of annual u. s. gdp ( nearly $ 25 trillion ), reflecting the leading role of u. s. capital markets in cross - border finance. total foreign investment in the united states is even larger, at more than $ 30 trillion. in a progressively integrating world economy and financial system, a central bank cannot ignore developments beyond its country ’ s borders, and the fed is no exception. this is true even though the fed ’ s statutory objectives are defined as specific goals for the u. s. economy. in particular, the federal reserve ’ s objectives are given