insight into industry practices and possible emerging risks. to complement on - site supervisory reviews, we are also creating an enhanced quantitative surveillance program that will make use of the skills not only of supervisors, but also of economists, specialists in financial markets, and other experts within the federal reserve. we are requiring large firms to provide supervisors with more detailed and timely information on risk positions, operating performance, and other key indicators, and we are strengthening consolidated supervision to better capture the firmwide risks faced by complex organizations. in sum, heeding the lessons of the crisis, we are committed to taking a more proactive and comprehensive approach to oversight to ensure that emerging problems are identified early and met with prompt and effective supervisory responses. we also have renewed and strengthened our longstanding commitment to transparency and accountability. in the making of monetary policy, the federal reserve is highly transparent, providing detailed minutes three weeks after each policy meeting, quarterly economic projections, regular testimonies to the congress, and much other information. our financial statements are public and audited by an outside accounting firm, we publish our balance sheet weekly, and we provide extensive information through monthly reports and on our website on all the temporary lending facilities developed during the crisis, including the collateral that we take. further, our financial activities are subject to review by an independent inspector general. and the congress, through the government accountability office, can and does audit all parts of operations, except for monetary policy and related areas explicitly exempted by a 1978 provision passed by the congress. the congress created that exemption to protect monetary policy from short - term political pressures and thereby to support our ability to effectively pursue our mandated objectives of maximum employment and price stability. in navigating through the crisis, the federal reserve has been greatly aided by the regional structure established by the congress when it created the federal reserve in 1913. the more than 270 business people, bankers, nonprofit executives, academics, and community, agricultural, and labor leaders who serve on the boards of the 12 reserve banks and their 24 branches provide valuable insights into current economic and financial conditions that statistics cannot. thus, the structure of the federal reserve ensures that our policymaking is informed not just by a washington perspective, or a wall street perspective, but also a main street perspective. if confirmed, i look forward to working closely with this committee and the congress to achieve fundamental reform of our system of financial regulation and stronger, more effective supervision. it would be a tragedy if, after all the hardships that americans have endured

. as shown in figure 7, net private capital flows to latin american and asian emes ( reported as a share of the aggregate gdp of those emes ) were substantial in the second half of 2009 and the first half of 2010 but were not obviously outsized compared with levels prior to the crisis. 18 a similar pattern is evident in figure 8, which depicts the net inflows since 2007 into mutual funds investing in eme bonds and equities. in each case, the strong inflows over the past year or so reflect a recovery in the wake of the large outflows that occurred during the crisis. in fact, the stock of claims on emes has only returned to its pre - crisis trend. accommodative monetary policies in the advanced economies, including the federal reserve ’ s asset purchases, have likely played some role in widening interest rate differentials and encouraging capital flows to emes. but this role should not be exaggerated. other factors – including a reversal of the capital outflows from emes during the financial crisis and the emes ’ longer - term favorable growth prospects – likely have also been important. moreover, it would be a mistake to portray these capital flows as an unmitigated negative for the emes. a rebalanced global economy in which emes depend more on domestic demand for their growth will likely involve ultimately stronger and more sustained capital flows to these economies. finally, i would like to comment on the critique that our asset purchase program is meant to promote u. s. growth at the expense of other nations by depreciating the dollar and enhancing u. s. competitiveness. that argument ignores the fact that stimulating growth in the united states is also likely to boost our demand for foreign goods and promote growth abroad. this effect will provide an important offset to the other implication of u. s. monetary stimulus that i discussed earlier – that it may lead to moderate movements in the foreign exchange value of the dollar that tend to lower u. s. demand for foreign goods. whether foreign demand is ultimately boosted or diminished by u. s. monetary policy depends on the relative sizes of these two effects and is ultimately an empirical question. 19 however, given the moderate exchange rate effects that we believe the federal reserve ’ s asset purchases for the purposes of this discussion, the emes comprise argentina, brazil, chile, china, colombia, hong kong, india, indonesia, malaysia, mexico, the philippines, singapore, south korea,