ben s bernanke : microfinance in the united states remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the accion texas summit on microfinance in the united states, san antonio, texas, 6 november 2007. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system ’ s website. * * * last month i had the pleasure of meeting with someone very well known to this audience but not so well known to americans generally : dr. muhammad yunus. perhaps more than any other individual, dr. yunus inspired the movement that has become known as microfinance. in 1976, dr. yunus founded the grameen bank in bangladesh, which became one of the pioneers of the concept of offering small loans to people deemed too poor or insufficiently creditworthy to qualify for traditional bank loans. the organization and the larger movement it helped spawn have financed the entrepreneurial aspirations of many thousands of people. the great majority of those who have benefited from grameen bank loans have been women, particularly poor rural women. microfinance has offered borrowers, in dr. yunus's words, " a fair chance to unleash their energy and creativity " ( yunus, 2006 ). his innovative thinking and dedication to poverty relief through the extension of credit were honored in 2006 by the award of the nobel peace prize. and the movement itself was recognized when the united nations declared 2005 to be the international year of microcredit. 1 the microfinance, or microcredit, movement has spread throughout the world – to other parts of asia, africa, latin america, and, more recently, to the united states. although the social and economic contexts differ widely across countries, the fundamental purpose of microfinance programs remains the same : to offer small loans and other financial services to low - income people to help them increase their incomes through entrepreneurship and selfemployment. accion texas has been an exemplar of the movement in the united states. i am very pleased to speak at your summit meeting today for many reasons, not the least of which is the opportunity to visit again with janie barrera, the president of accion texas. i had the pleasure of working with janie when she was a member of the federal reserve board's consumer advisory council, which has been an invaluable resource for the board over

was the yuppy period, unsound investments and a wage and price spiral that hit the entire economy. the norwegian economy had to go through an extensive turnaround operation in the late 1980s. confidence in monetary policy and the norwegian krone had to be restored in order to avoid persistently high inflation. it took a long time, and very high interest rates were required, before confidence in the nominal anchor was restored. 5. conclusion through a sound, credible orientation of monetary policy, it is possible to attain an inflation rate that on average is equal to the targeted figure. by practising flexible inflation targeting, i. e. having a mediumterm horizon for the inflation target, we can also achieve a reasonable trade - off between inflation variability and output variability in the short term. but monetary policy has no lasting effect on output and employment. these are determined by the supply of economic resources - capital and labour. technological developments, and our ability to use that technology, also play a decisive part. in the long run, monetary policy cannot influence output, employment or competitiveness beyond the benefits that follow from low and stable inflation. the economy requires a nominal anchor. the government has laid out a guideline for monetary policy which implies flexible inflation targeting. this is a regime that has also won broad international support. this bis review is available on the bis website at www. bis. org.