banking doctrine and practice are never static. we and other central banks around the world will have to continue to work hard to adapt to events, new ideas, and changes in the economic and financial environment. references ahmed, shaghil, andrew levin, and beth anne wilson ( 2004 ). “ recent u. s. macroeconomic stability : good policies, good practices, or good luck? “ review of economics and statistics, vol. 86 ( august ), pp. 824 – 32. alesina, alberto, and lawrence h. summers ( 1993 ). “ central bank independence and macroeconomic performance : some comparative evidence, ” journal of money, credit and banking, vol. 25 ( may ), pp. 151 – 62. axilrod, stephen h. ( 1982 ). “ monetary policy, money supply, and the federal reserve ’ s operating procedures ” in paul meek, ed., central bank views on monetary targeting. new york : federal reserve bank of new york, pp. 32 – 41. bagehot, walter ( [ 1873 ] 1897 ). lombard street : a description of the money market. new york : charles scribner ’ s sons. bernanke, ben s. ( 2002 ). “ asset - price ‘ bubbles ’ and monetary policy, ” speech delivered at the new york chapter of the national association for business economics, new york, october 15. - - - - - - - - ( 2004 ). “ the great moderation, ” speech delivered at the meetings of the eastern economic association, washington, february 20. - - - - - - - - ( 2011 ). “ the effects of the great recession on central bank doctrine and practice, ” speech delivered at the federal reserve bank of boston 56th economic conference, boston, october 18. bernanke, ben s., and frederic s. mishkin ( 1997 ). “ inflation targeting : a new framework for monetary policy? ” journal of economic perspectives, vol. 11 ( spring ), pp. 97 – 116. board of governors of the federal reserve system ( 1924 ). tenth annual report of the federal reserve board, covering operations for the year 1923. washington : government printing office. bordo, michael d., and david c. wheelock ( 2013 ). “ the promise and performance of the federal reserve as lender of last resort 1914 – 1933, ” in michael d. bordo and william see yellen ( 2012 ) for an el

the individual firms or markets within each agency's scope of authority, but also the responsibility to try to identify and respond to the risks those entities may pose, either individually or through their interactions with other firms or markets, to the financial system more broadly. these actions could be taken by financial supervisors on their own initiative or based on a request or recommendation of the oversight council. importantly, each supervisor's participation in the oversight council would greatly strengthen that supervisor's ability to see and understand emerging risks to financial stability. at the same time, this type of approach would vest the agency that has responsibility and accountability for the relevant firms or markets with the authority for developing and implementing effective and tailored responses to systemic threats arising within their purview. to maximize effectiveness, the oversight council could help coordinate responses when risks cross regulatory boundaries, which often will be the case. the federal reserve already has begun to incorporate a systemically focused approach into our supervision of large, interconnected firms. doing so requires that we go beyond considering each institution in isolation and pay careful attention to interlinkages and interdependencies among firms and markets that could threaten the financial system in a crisis. for example, the failure of one firm may lead to runs by wholesale funders of other firms that are seen by investors as similarly situated or that have exposures to the failing firm. these efforts are reflected, for example, in the expansion of horizontal reviews and the quantitative surveillance program i discussed earlier. improved resolution process another critical element of the systemic risk agenda is the creation of a new regime that would allow the orderly resolution of failing, systemically important financial firms. in most cases, the federal bankruptcy laws provide an appropriate framework for the resolution of nonbank financial institutions. however, the bankruptcy code does not sufficiently protect the public's strong interest in ensuring the orderly resolution of a nonbank financial firm whose failure would pose substantial risks to the financial system and to the economy. indeed, after the lehman brothers and aig experiences, there is little doubt that we need a third option between the choices of bankruptcy and bailout for such firms. a new resolution regime for nonbanks, analogous to the regime currently used by the federal deposit insurance corporation for banks, would provide the government the tools to restructure or wind down a failing systemically important firm in a way that mitigates the risks to financial stability and the economy and thus protects the public interest. it also would provide the government a mechanism for imposing losses