that there were no adequate procedures in place for liquidating the assets of systemically important financial institutions in an orderly fashion. in 2010, the u. s. congress passed an act that provides these procedures. simultaneously – and correctly – the congress removes the fed ’ s ability to engage in institution - specific assistance. the act does leave in place the fed ’ s ability to engage in broad - based market interventions of the kind that i ’ ve described, albeit with more congressional and white house oversight. this ability of the fed could be useful in the event that financial market turmoil in other parts of the world ever threatens to spread to u. s. credit and capital markets. cutting interest rates i ’ ve talked about how the fall in land prices generated a sharp increase in risk perceptions in financial markets and how that in turn led to a financial crisis. i now want to turn to what i see as the second key effect of the fall in land prices. this fall reduced the net worth of many households and firms. according to fed calculations, household net worth fell by over 25 percent from the second quarter of 2007 to the first quarter of 2009. households responded to this change in their balance sheets by forgoing consumption, which led in turn to a fall in output and employment, 3 and put downward pressure on the price level. the fomc reacted by lowering its target interest rate from 5. 25 percent in august 2007 to a range of 0 to 0. 25 percent in december 2008 ; it now remains at this lower bound. since inflation expectations remained stable, the fomc ’ s action has had the effect of lowering the real interest rate facing households. households, of course, typically respond to lower rates by saving less and demanding more consumption. similarly, firms undertake more investment projects. in this way, the fomc can and has partially offset the impact on the economy of the loss of net worth. indeed, the fomc would probably have liked to respond by cutting its target interest rate still further. the problem is that this target interest rate cannot go below zero. instead, the fomc has engaged in large - scale purchases of long - term assets issued or backed by the government. the goal of these transactions is to lower long - term real interest rates and again offset the impact on the economy of the net worth shock. so, to sum up, the fall in land prices triggered an increase in risk perceptions and a decrease in household net worth. the increase in risk led to

jwala rambarran : central bank of trinidad and tobago – serving its citizens remarks by mr jwala rambarran, governor of the central bank of trinidad and tobago, at the divali celebrations 2013 – jai shri hanuman, port of spain, 27 october 2013. * * * sita ram, good evening and welcome to the central bank of trinidad and tobago. we feel honoured and heartened that so many of you accepted our invitation to attend the central bank ’ s divali 2013 show entitled, jai shri hanuman. this evening ’ s divali show is the second consecutive one of its kind to be put on by the central bank since i assumed office. as you look around and admire the tremendous decorative effort and thought gone into this evening ’ s event, you may have a few burning questions on your mind. perhaps one major question relates to why the central bank is celebrating lord hanuman and not mother lakshmi, the goddess of wealth and prosperity, who is the traditional deity worshipped at divali, and the one who we would all say is an obvious choice for the bank. the answer is quite simple. for divali 2012, we were inspired by mother lakshmi for our celebrations, and as we moved into planning this year ’ s divali events, we thought of the ramayana and decided, for the next four years, to use a different character from the ramayana on which to base our celebrations. this year, as you can see, we selected lord hanuman, and the theme is : “ a symbol of strength and stability. ” as you may all be aware, hanuman is a central figure in the ramayana, one of the greatest of hindu epics and a sacred text that has been the source of courage, strength and inspiration for the hindu community since the earliest days of indentureship in trinidad and tobago and the wider caribbean. hanuman is a devoted servant of lord rama, who willingly responds to the request of lord rama to help rescue sita. sita was lord rama ’ s wife who was kidnapped by the demon king ravan. hanuman performs various tasks in his quest to rescue sita, eventually ending in a battle between good and evil in which ram defeats ravan. in each of these arduous tasks, hanuman uses not just his miraculous powers such as the ability to change his size at will and to fly across long distances, but he uses his intellect, knowledge and wisdom to outsmart the various demons he encounters.