jeremy c stein : crowdfunding for community development finance welcoming remarks by mr jeremy c stein, member of the board of governors of the federal reserve system, at the crowdfunding for community development finance conference, washington dc, 24 march 2014. * * * good morning. let me start by welcoming everyone to the federal reserve. today ’ s topic of crowdfunding for community development finance is an important and topical one, and i want to thank you all for helping us think through the challenges and opportunities presented by this new technology as it relates to raising funds for local communities. this gathering is particularly timely for two reasons. first, in many communities, traditional resources for community development are shrinking, and the field is actively seeking to identify new sources of funding. second, the securities and exchange commission recently released its proposed rule under the jumpstart our business startups – or jobs – act, which is likely to influence the environment for crowdfunding in general and for community development finance specifically. to the extent that most people know about crowdfunding at all, they may associate it with tech startups or independent movie production, since the press coverage has often focused on examples in these areas. these stories typically describe the use, and often success, of crowdfunding, as aspiring inventors and artists are able to tap the internet to raise the money that can help make their visions a reality. the question for today is whether this power of the crowd can be harnessed to support community development, a field that has not widely benefitted from crowdfunding thus far. indeed, when i say “ power of the crowd, ” it is worth noting that while individual investment amounts may be small, the total amount of funds raised from this source can be large. although we lack reliable data on the current size of crowdfunding, some sources indicate that it ’ s a multibillion - dollar industry, with more than 1 million separate offerings each year, and that the field is growing rapidly. 1 while crowdfunding may not be as well known in the community development context, there are, in fact, existing models of crowdfunding for community development that we can learn from. i understand that several of these existing models will be discussed on a panel later this morning. one local example is fundrise, an investment platform for commercial real estate that gives individuals the opportunity to invest directly in neighborhood businesses. fundrise started on the h street corridor here in d. c., and has completed

fund bis central bankers ’ speeches chart 6 – global primary energy consumption million tonnes oil equivalent oecd non - oecd source : bp statistical review 2010 this pattern of upward pressure on energy and commodity prices has been particularly noticeable since the mid - 2000s and it has had a significant influence on inflation in many countries – particularly affecting the prices of goods. the so - called “ china effect ”, through which the shift of production to low cost countries held down the prices of global manufactures and traded goods in the late 1990s and the first half of the 2000s, has given way to a period of higher global inflation, driven by rising energy and commodity prices. chart 7 shows how this has affected the rate of inflation in goods prices in the uk, which has picked up significantly in recent years – whether measured in terms of manufactured products at the factory gate or the goods which enter into the consumer basket. chart 7 – uk goods price inflation annual percentage change in prices manufactured goods producer prices cpi goods inflation - 2 - 4 source : ons one of the key challenges facing the mpc and other monetary authorities around the world is judging how far this surge in energy and commodity prices has yet to run and how farreaching its consequences might be. the tendency so far in many countries, including the bis central bankers ’ speeches uk, has been to treat this phenomenon as a series of one - off shocks. but the driving force behind it – strong growth in asia and other emerging market economies – is proving quite persistent – as chart 8 shows. chart 8 – emerging market growth remains strong annual percentage growth rates of real gdp advanced economies * emerging & developing economies * - 2 - 4 * : 2011 and 2012 growth rates are imf forecasts. source : imf world economic outlook this raises the possibility that some key commodity markets, including the market for oil, could be in a structural position of scarcity for some time yet, leading to further significant upward price movements. for example, in its recent world economic outlook, the imf published an analysis suggesting that current trends in the oil market – with supply unable to keep up with strong demand – could lead to a further 200 % rise in oil prices from current levels over the next 20 years. 5 of course, there is great uncertainty around such predictions. but my judgement would be that this imf analysis is likely to be directionally correct, even if we can ’ t be precise about the exact timing and scale of upward price movements. this upward shift in energy and