as a whole, the reserve bank presidents bring specialized information about their regional economies to the fomc discussion. before each fomc meeting, reserve bank presidents consult with their staff of economists as well as their boards of directors, business contacts in their districts, and market experts to develop their independent views of appropriate monetary policy. the fomc works to achieve a consensus policy by blending inputs from the members of the board of governors and from the reserve bank presidents under the leadership of its chair. by tradition, the chair of the board has been chosen as the chair of the fomc and has had a central role in setting the agenda for the fomc and developing consensus among the committee ’ s members. in addition, the chair is the most visible public face of the federal reserve system. for a discussion of the federal reserve ’ s dual mandate, see the fomc ’ s statement on longer - run goals and monetary policy strategy, which the committee first issued in january 2012 and reaffirms annually, in note 26. in addition, for a discussion of how the fomc prepares for its meetings, see elizabeth a. duke ( 2010 ), “ come with me to the fomc, ” speech delivered at the money marketeers of new york university, new york, october 19, https : / / www. federalreserve. gov / newsevents / speech / duke20101019a. htm. for a discussion of these issues, see marvin goodfriend ( 1999 ), “ the role of a regional bank in a system of central banks, ” carnegie - rochester conference series on public policy, vol. 51 ( december ), pp. 51 - 71. - 11 the fed is accountable to congress and the public for its activities and decisions. historically, the activities of central banks were shrouded in mystery. montagu norman, the famously secretive governor of the bank of england from 1920 to 1944, reportedly took as his personal motto, “ never explain, never excuse ” ( figure 11 ). 21 in the modern era, all that has changed, as central banks have come to see transparency both as a requirement of democratic accountability and as a way of supporting the efficacy of their policies. over recent decades the fed has significantly augmented its public communications, as have other major central banks. the chair testifies before congress twice each year about the u. s. economy and the fomc ’ s monetary policy in pursuit of its

system, all too often has contributed to conceal the true level of leverage and risk. it may be that, as in other economic activities, innovation in finance will inevitably entail increasing complexity. in most cases, whether we think of the pharmaceutical industry or big utility networks, the risks attached to this complexity have been identified and mastered. this may be more difficult when human behavior is directly involved, as in financial or epidemiological systems, thus adding another, and different layer of complexity. both the industry and regulators will have to rise up to this formidable intellectual and operational challenge and i am convinced that your conference to day will provide invaluable help in this regard. thank you. references caballero, krishnamurty " collective risk management in a flight to quality episode " the journal of finance vol. lxiii, no. 5, october 2008. caballero, simsek : complexity and financial panics, nber working paper 14997, may federal reserve bank of new york " new directions for understanding systemic risk " economic policy review volume 13, number 2, november 2007. gorton : the panic of 2007. paper presented at the economic symposium of the federal reserve bank of kansas city. jackson hole. august 2008. haldane andrew : " rethinking the financial network ", speech delivered at the financial student association, amsterdam, april 2009 ( available on the boe website ). kashyap, rajan, stein : " rethinking capital regulation ", paper prepared for federal reserve bank of kansas city symposium on “ maintaining stability in a changing financial system ”, jackson hole, wyoming, august 21 - 23, 2008. landau : “ extreme events in finance : some reflexions ”, remarks at the conference on extreme events jointly organised by the banque de france and toulouse school of economics ( tse ), september 3, 2008.