ben s bernanke : order of the palmetto remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the presentation of the order of the palmetto, dillon, south carolina, 1 september 2006. * * * i am very pleased to have the opportunity to come back to dillon and very grateful for the honor you have done me today. thank you all very much for your thoughtfulness and your efforts to prepare for this event. it is good to see so many people that i remember, as well as their children and maybe even a few grandchildren. my family ’ s connection with dillon goes back about sixty years. my grandfather jonas bernanke and his wife, lina, moved here in the 1940s when jonas purchased a local drugstore. jonas named the store with his own initials - hence jay bee drugs. jonas ’ s sons - my dad and my uncle - bought the store from their father and ran it as partners for many years. the original store was on main street, but when the chain stores entered the local market, my dad and uncle built a new, larger, and more modern store a block off main. they competed by offering personal, first - name service, by delivering prescriptions without charge, and by coming down to the store at any time, nights or sundays, to fill an emergency prescription. dillon had very few doctors at the time, and lots of people came to my dad and uncle for advice on basic health matters. my mother, who gave up a job teaching elementary school when i was born, often helped out in the store. as a child, i was supposed to help out as well, but i usually ended up in the store ’ s comic book section. our family moved to dillon when i was very small, and all my childhood memories are here. i went to east elementary, j. v. martin junior high, and dillon high school. quite a few friends were classmates for all twelve grades. i made many other friends playing saxophone in the high - school marching band. my family and i attended dillon ’ s small synagogue, ohav shalom, which is unfortunately no longer in existence. as a teenager, like many other teenagers, i itched to get away from the small town in which i was raised to see the bright lights of the big city. i got my wish, leaving when i was seventeen to attend college and graduate school in boston. i met my wife in boston

that we can narrow the policy gap between systemic risk assessments and their translation into risk mitigating policy actions, this will ultimately enhance the financial system ’ s resilience to adverse disturbances. in this sense the political support for these reforms is absolutely essential. conclusion let me conclude. monetary and fiscal policies, through vigorous and swift action at the peak of the financial crisis, have avoided a free fall in economic activity and a further drying up of financial markets. as we gradually seem to be leaving the extraordinary circumstances behind us, monetary and fiscal policies must return to their normal mode of operation. will that normal mode look different from the one before the crisis? as for monetary policy, you can be assured that the ecb will monitor all developments carefully and continue to gradually phase - out at the appropriate time its enhanced credit support measures, without hampering the functioning of financial markets. let me also assure you that maintaining price stability remains our primary objective. at the same time, let me also emphasize that central banks must become more wary of financial market risks and their macroeconomic implications to the overall benefit of achieving the monetary policy objective. as regards fiscal policies, consolidation efforts need to be implemented timely and credibly, and as in the past with a particular focus on the expenditure side. as to macroprudential policies, the recent crisis has strikingly illustrated the interconnectedness that characterizes the financial system. this has reaffirmed the need to strengthen macroprudential policies, i. e. the focus on the systemic nature of risks and their mitigation to reduce the chances on such a crisis from happening again need. finally, let us not forget the importance of self set standards and rules by the financial markets themselves. importantly, the financial industry must be aware of their own responsibility and need to draw the right lessons from the crisis for future practises. thank you for your attention.