roger w ferguson, jr : the new england economic adventure remarks by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the opening of the new england economic adventure at the federal reserve bank of boston, boston, 8 october 2003. * * * it is a pleasure to participate in the opening of the new england economic adventure at the federal reserve bank of boston. the educational possibilities presented by the adventure are truly exciting. the federal reserve system has a long history of involvement in economic education. an understanding of economic principles, especially the workings of markets, is fundamental to good decisionmaking - whether by workers, or employers, or public policymakers. i also confess to some self - interest in this regard. a better understanding of economics by the public makes the task of the federal reserve system easier. people may disagree with our policies - some may have different objectives and others may think different approaches to achieving those objectives would be more effective - but at least we are speaking the same language. they know what we are trying to do, and they know why. historically, much of our education effort has focused on increasing public understanding of the federal reserve system itself : how we are structured, the nature and scope of our mission, the monetary policy and supervisory tools at our disposal. providing information about the fed remains a key part of our programs. for the past ten or so years, we have been running the fed challenge, a competition in which teams of high school students engage in mock federal open market committee discussions and make recommendations regarding monetary policy. the quality of the analysis and the sophistication of the presentations have been impressive. by comparison, our own fomc deliberations seem a little dry ; for example, we on the fomc tend to be a little more low tech than the students, who come armed with very colorful computer - driven graphics to support their analysis and arguments. but teaching general economic principles has also been a recurring theme. a number of federal reserve banks work closely with the national council on economic education ( ncee ), which has a host of fascinating programs that make teaching and learning economics fun. gary stern, the president of the federal reserve bank of minneapolis, currently chairs the ncee, and i was privileged to address that group in may, 2002. in recent years, the federal reserve has increased its attention to financial literacy, an area that might be seen as the more practical, personal side of economic education.

- educated population and has relatively good airline and telecommunications connections. an ofc can also have a positive impact on the resident financial sector, through better access to international capital markets and more financial expertise. however, despite these advantages, many ofcs realise that they cannot ignore the growing concerns regarding their role in the international financial system. let me elaborate on the importance of ofcs for international financial stability. note that in our definition, we defined a stable financial system as a system that prevents shocks from having a disruptive effect on the real economy, but also on other financial systems. the latter part of this definition has become more relevant as financial systems have become more interrelated. the importance of ofcs for international financial stability can be illustrated by a few figures. in the first quarter of this year, bis reporting banks ’ claims against ofcs comprised almost ten percent of their total cross - border claims, creating a total risk exposure of almost 400 billion us dollars. these exposures are larger if off - balance - sheet activities are taken into account. in addition, insurance corporations and investment funds also use ofcs. unfortunately, information on these off - balance and non - bank exposures is scarce. two years ago, the financial stability forum identified ofcs as a weak spot in the international financial system. in particular, ofcs were spurred to strengthen their supervision and regulation frameworks and co - operate more intensively with the onshore authorities. subsequently, the imf has been asked to monitor the progress in this area, by carrying out offshore financial sector assessments. for aruba, this assessment was completed in june of this year, and looks very encouraging. after all, only two years ago aruba was classified by the financial stability forum as one of the ofcs with legal structure and supervisory practices of a lower quality. compared to other ofcs, offshore banks and insurance corporations are relatively unimportant in aruba. by contrast, the large number of small, corporate vehicles is of particular interest. actually, almost 5000 offshore corporate entities are registered on the island. up to now, these were not supervised and not very transparent, and therefore represented a potential risk from a financial stability point of view. following the imf ’ s recommendation, however, the central bank of aruba will probably be appointed as regulator of this sector. in particular, the bank will supervise company service providers, which act as legal representatives of the offshore corporate entities. as a motivation for recommending the central bank of ar