and regulatory policy decisions, how policy is implemented or the supervisory oversight of banks. the dodd - frank act also addressed the need for enhanced transparency by establishing disclosure requirements for participation in federal reserve facilities. in terms of transparency, i do think it is a fair critique that, in the past, the federal reserve has not always been sufficiently transparent. for example, prior to 1994, we typically didn ’ t even announce changes that were being implemented in monetary policy. market participants had to infer what we were doing from our daily open market operations and where the federal funds rate was trading. during the crisis, i also believe we could have done more to explain the motivations for our extraordinary interventions. at times, while the motivations and objectives might have been obvious to us, they weren ’ t always as readily apparent to congress or to the public. i think this created uncertainty about what we were trying to accomplish, and made it more difficult for outside observers to assess the appropriateness of our actions and our motives. today the situation is quite different. we have made significant enhancements with respect to transparency. after each meeting, the fomc issues a statement that sets the current target range for the federal funds rate and explains its monetary policy decision. four times a year, the chair holds a press conference explaining the decision and the fomc releases its summary of economic projections ( sep ). the sep provides the fomc participants ’ forecasts for key economic variables and the federal funds rate over the next few years. in addition, the fomc participants give numerous speeches explaining their views on monetary policy and other issues, and the chair regularly testifies about monetary policy and the federal reserve ’ s other activities before congress. overall, i have found that this move towards greater transparency has held us in good stead. nearly six years since the enactment of the dodd - frank act, there still remains considerable debate about whether further changes to the role and structure of the federal reserve system are warranted. some of the issues being debated include how much discretion the federal reserve should have in the conduct of monetary policy, whether the federal reserve is sufficiently transparent in how it operates, and the role of the new york fed. i would caution that any further changes to the federal reserve system should be grounded on what we learned from the crisis and based on the needs of our evolving economy. changes should be undertaken if they would make the federal reserve more effective in its mission. in contrast, changes based on an emotional

of banking would inevitably result in one of two alternatives : either complete governmental control, which meant politics in banking, or control by “ wall street, ” which meant banking in politics. 4 importantly, the federal reserve was designed to have budgetary independence from the federal government. the system funds itself through its business operations, and not through congressional appropriations. 5 this formed an important foundation in ensuring that the conduct of monetary policy would be independent from political influence. a wide range of research has shown that central banks achieve better outcomes with respect to employment and inflation when they are insulated from short - term political pressures in their conduct of monetary policy. 6 the federal reserve system was soon tested, first by the depression of 1920 – 21, and then by the great depression. the searing experience of the great depression, including the 1933 banking holiday and thousands of bank failures, revealed significant shortcomings. this led to the banking act of 1935, which made two important changes – establishing a federal deposit insurance system and making the federal reserve system more centralized. the great depression made it clear that having a lender of last resort was not sufficient for preventing bank runs. deposit insurance, which had been debated but not adopted during the drafting of the federal reserve act, was instituted with the creation of the federal deposit insurance corporation. a second lesson was that monetary policy would be more effective if it were coordinated at the national level, rather than conducted individually by the reserve banks. 7 to accomplish this, the banking act replaced the federal reserve board with the board of governors of the federal reserve system, and established the federal open market committee ( fomc ) to oversee the conduct of monetary policy. the governors in washington were made dominant because they were given the majority of votes on the fomc. 8 over time, the role of the executive branch and the u. s. treasury was reduced. beginning in 1936, the secretary of the treasury no longer served on the fomc. the federal reserve board moved to its own building in 1937, and the federal reserve gained independence in the setting of monetary policy with the treasury - federal reserve accord in 1951. a century following the panic of 1907, another financial crisis led to the great recession. as was the case following the great depression, weaknesses exposed by the crisis led to further changes to the federal reserve system. some of these changes were legislated while others were initiated by the federal reserve itself. before discussing the lessons learned from the financial crisis and the changes that ensued,