to retain the ability to lend against good collateral to certain groups of sound, regulated, nonbank financial firms. i ’ m not suggesting that we establish permanent contingency liquidity facilities, just that the federal reserve retain the authority to create the tools necessary to meet liquidity needs of groups of nonbank institutions should a panic impair the ability of securities markets, as well as banks, to function and the board of governors find that the absence of such functioning would threaten the economy. 3 the collateral would have to be of good quality and the institutions sound to minimize any credit risk to the federal reserve. holding open this possibility is not without cost. with credit potentially available from the federal reserve, institutions would have insufficient incentives to manage their liquidity to protect against unusual market events. hence, the emergency credit would generally be provided only to groups of institutions that were regulated and supervised to limit such moral hazard. if the federal reserve did not directly supervise the institutions that would potentially receive emergency discount window credit, we would need an ongoing and collaborative relationship with the supervisor. the supervisor should ensure that any institution with implicit access to emergency discount window credit nevertheless maintained conservative liquidity policies. the supervisor would also provide critical insight into the financial condition of the borrower and the quality of the available collateral and more generally whether lending was necessary and appropriate. large - scale asset purchases and the buildup of the reserve base the federal reserve and other central banks reacted to the deepening crisis in the fall of 2008 not only by opening new liquidity facilities, but also by reducing policy interest rates to close to zero. such rapid and aggressive responses were expected to cushion the effects of the shock on the economy by reducing the cost of borrowing for households and businesses, thereby encouraging them to keep spending. in addition, the federal reserve and a number of other central banks have provided more guidance than usual about the likely future path of interest rates to help financial markets form more accurate expectations about policy in a highly uncertain economic and financial environment. in particular, we were concerned that market participants would not fully appreciate for how long we anticipated keeping interest rates low. if they hadn ’ t, intermediate - and longer - term rates would have declined by less, reducing the stimulative effect of the very low policy rates. given the severity of the downturn, it became clear that lowering short - term policy rates alone would not be sufficient. we needed to go further to ease financial conditions and encourage spending. thus, to reduce longer - term interest

we believe that the best ideas, policies and, ultimately, service to the public are the result of diverse perspectives, and from a staff that reflects the rich diversity of our nation. inclusion makes us stronger by providing all employees the assurance that they will be working in an environment that welcomes and values their differences, and that recognizes and rewards people according to the contributions they make in advancing the mission of the organization. that is not to say that we have all of the solutions, or that we do not have considerable progress to make. but we have made efforts in a number of areas. these efforts are consistent with the congressional directive to establish the office of minority and women inclusion, and as articulated in the board of governors'strategic plan for diversity and inclusion. 2 first, we have made a commitment, and have made progress, to make our institution more diverse. that includes efforts to bring greater diversity to the board of directors of our federal reserve banks and branches as well as to senior leadership in the federal reserve system. we have also worked to improve our internal culture. these efforts include re - establishing and strengthening employee resource groups. we are working to come up with codes of conduct including efforts to make our meetings more inclusive and set rules around behavior in seminars. we are also providing diversity and inclusion as well as bystander training to both new and 1 / 2 bis central bankers'speeches existing employees. second, we have broadened our reach in recruiting to provide a more diverse range of applicants the opportunity to apply for positions at the federal reserve — through strengthening our connections to schools that serve diverse populations, hiring an outreach specialist for these communities, establishing a stronger presence at career fairs for diverse students, and hosting career events for students to promote jobs in economics and finance at the federal reserve. third, we are working with high schools and universities to inspire students'interest in economics and finance. we are also working to provide them with the tools they need to enter these fields. this has included partnerships with local high schools to teach economics, and with a local historically black university, howard university, to teach and mentor students in economics and statistical analysis. this last initiative has led to students developing an interest and pursuing careers in economics, including as research assistants at the federal reserve, and several are currently employed at the board as research assistants. of course, these conferences are also an important part of addressing diversity and inclusion in central banking, and the economics and finance professions. i look forward to welcoming all of you to