mr kelly ’ s observations on y2k compliance and the banking system speech by edward w kelley, jr, a member of the board of governors of the us federal reserve system, to the media studies center, new york, new york on 10 march 1999 good morning. my thanks to the media studies center and the freedom forum for inviting the federal reserve to participate in this meeting and, more important, for the initiative of sponsoring this gathering to discuss what i believe to be a critically important topic. as you may know, i have devoted a good deal of time to y2k preparation over the last two years, and in that process i have talked to a wide spectrum of people. i have reached the conclusion that, now that the country is at last aggressively addressing the problem, the most important single element in our successfully navigating through the challenges presented by the ‘ millennium bug ’ is how the public responds to it. there are very few places in our national life where the statement that ‘ attitude can affect outcomes ’ is so compellingly demonstrated as in the banking sector, particularly as we work to address y2k. you will no doubt agree that the best way to engender a strong and positive public attitude is through open and candid discussion, which i would like to encourage by briefly addressing three key questions. first, what are the critical components of public confidence in the banking system, and how are the industry, its regulators, and the central bank working to earn public trust in the y2k context? second, what are we confident about and what are we concerned about? when the media assesses the financial risk element of the y2k story, these may be appropriate places to start. and finally, what do we hope the media will do in the coming months? i believe there are four important elements needed for public confidence in banks and the banking system, and each is being addressed as we prepare for potential y2k problems. bank customers need to be assured • of ready access to cash and other funds and bank services • that their bank records are secure • that competent and energetic government supervision is being conducted • that deposit insurance is in place and inviolate i want to elaborate on these elements because i believe that public understanding of the banking industry ’ s y2k preparations will help maintain public confidence. first, cash availability. we do not see any need for a vast surge in demand for cash late this year, but if that should occur, it is the federal

ben s bernanke : fiscal sustainability speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the annual conference of the committee for a responsible federal budget, washington dc, 14 june 2011. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system ’ s website. * * * i am pleased to speak to a group that has such a distinguished record of identifying crucial issues related to the federal budget and working toward bipartisan solutions to our nation ’ s fiscal problems. today i will briefly discuss the fiscal challenges the nation faces and the importance of meeting those challenges for our collective economic future. i will then conclude with some thoughts on the way forward. fiscal policy challenges at about 9 percent of gross domestic product ( gdp ), the federal budget deficit has widened appreciably since the onset of the recent recession in december 2007. the exceptional increase in the deficit has mostly reflected the automatic cyclical response of revenues and spending to a weak economy as well as the fiscal actions taken to ease the recession and aid the recovery. as the economy continues to expand and stimulus policies are phased out, the budget deficit should narrow over the next few years. unfortunately, even after economic conditions have returned to normal, the nation faces a sizable structural budget gap. both the congressional budget office and the committee for a responsible federal budget project that the budget deficit will be almost 5 percent of gdp in fiscal year 2015, assuming that current budget policies are extended and the economy is then close to full employment. 1 of even greater concern is that longer - run projections that extrapolate current policies and make plausible assumptions about the future evolution of the economy show the structural budget gap increasing significantly further over time. for example, under the alternative fiscal scenario developed by the congressional budget office, which assumes most current policies are extended, the deficit is projected to be about 6 - 1 / 2 percent of gdp in 2020 and almost 13 percent of gdp in 2030. the ratio of outstanding federal debt to gdp, expected to be about 69 percent at the end of this fiscal year, would under that scenario rise to 87 percent in 2020 and 146 percent in 2030. 2 one reason the debt is projected to increase so quickly is that the larger the debt outstanding, the greater the budgetary cost of making the required interest payments. this dynamic is clearly unsustainable. the nation ’ s long - term fiscal imbalances did not emerge