may 2009 the board hosted a community development finance summit to discuss promising strategies for cdfis facing challenges in the current crisis. the federal reserve bank of san francisco has conducted research on these topics through its center for community development investments, and the federal reserve bank of boston has worked with key partners to identify and promote best practices. are purchasing homes, which might otherwise sit vacant, from loan servicers who take possession of foreclosed properties. these homes are repaired and then sold or rented to families. because foreclosures and resulting vacancies impose costs on neighborhoods and local governments, facilitating occupancy can help maintain neighborhood stability. 16 these efforts are difficult, time consuming, and challenging to finance – exactly the kind of thing in which cdfis specialize. cdfis and other groups across the country are working hard to stabilize neighborhoods because they do not want to lose the progress attained by years, and sometimes decades, of investment in low - and moderate - income communities. indeed, this community stabilization work is important for the overall economic recovery. healthy and vibrant neighborhoods are a source of economic growth and social stability. cdfis and other community groups are already responding to the evident needs, but they will require many willing partners to ensure success in the long run, including governments, mortgage servicers, and mainstream lenders. strong community organizations can accomplish a great deal, but their capacity will be severely limited without the willing partnership of many other institutions. conclusion as the effects of the financial crisis and the resulting economic downturn have spread, there has been increased focus on preserving the gains made in low - and moderate - income communities over recent decades. accomplishing that objective requires preserving the institutions that helped build these communities. without strong cdfis, attracting investments and capital to rebuild and revitalize communities would be even more difficult. economic recovery, like economic development, is a bottom - up as well as a top - down process. through their work at the community level, cdfis, together with other community development organizations, can help build a sustainable recovery for all of us. in particular, recent research points to the adverse spillover effects of foreclosures on local property values. see, for example, zhenguo lin, eric rosenblatt, and vincent w. yao ( 2009 ), " spillover effects of foreclosures on neighborhood property values, " journal of real estate finance and economics, vol. 38 ( 4 ), pp. 387

have certainly been important. another factor is the special international status of the u. s. dollar. because the dollar is the leading international reserve currency, and because some emergingmarket countries use the dollar as a reference point when managing the values of their own currencies, the saving flowing out of the developing world has been directed relatively more into dollardenominated assets, such as u. s. treasury securities. the effects of the saving outflow may thus have been felt disproportionately on u. s. interest rates and the dollar. for example, the dollar probably strengthened more in the latter 1990s than it would have if it had not been the principal reserve currency, enhancing the effect on the u. s. current account. most interesting, however, is that the experience of the united states in recent years is not so nearly unique among industrial countries as one might think initially. as shown in table 1, a number of key industrial countries other than the united states have seen their current accounts move substantially toward deficit since 1996, including france, italy, spain, australia, and the united kingdom. the principal exceptions to this trend among the major industrial countries are germany and japan, both of which saw substantial increases in their current account balances between 1996 and 2003 ( and significant further increases in 2004 ). a key difference between the two groups of countries is that the in pointing out the possible effects of strong global saving on real interest rates, i do not mean to rule out other factors. for example, a lowering of risk premiums resulting from increased macroeconomic and monetary stability has likely played some role. greenspan ( 2005 ) notes a strong correlation between u. s. mortgage debt and the u. s. current account deficit. countries whose current accounts have moved toward deficit have generally experienced substantial housing appreciation and increases in household wealth, while germany and japan - whose economies have been growing slowly despite very low interest rates - have not. for example, wealthto - income ratios have risen since 1996 by 14 percent in france, 12 percent in italy, and 27 percent in the united kingdom ; each of these countries has seen their current account move toward deficit, as already noted. by contrast, wealth - to - income ratios in germany and japan have remained flat. the evident link between rising household wealth and a tendency for the current account to shift toward deficit is consistent with the mechanism that i have described today. economic and policy implications i have presented today a somewhat unconventional explanation of the high and