ben s bernanke : the federal reserve – looking back, looking forward speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the annual meeting of the american economic association, philadelphia, pennsylvania, 3 january 2014. * * * in less than a month my term as fed chairman will end. needless to say, my tenure has been eventful – for the federal reserve, for the country, and for me personally. i thought it appropriate today to reflect on some accomplishments of the past eight years, as well as some uncompleted tasks. i will briefly cover three areas in my remarks : ( 1 ) the federal reserve ’ s commitment to transparency and accountability, ( 2 ) financial stability and financial reform, and ( 3 ) monetary policy. i will close by discussing the prospects for the u. s. and global economies. transparency and accountability fostering transparency and accountability at the federal reserve was one of my principal objectives when i became chairman in february 2006. i had long advocated increased transparency and, in particular, a more explicit policy framework as ways to make monetary policy more predictable and more effective. our efforts to enhance transparency and communication have indeed made monetary policy more effective, but, as i ’ ll discuss, these steps have proved important in other spheres as well. when i began my term i expected to build on the monetary policy framework i had inherited from paul volcker and alan greenspan. my predecessors had solidified the fed ’ s commitment to low and stable inflation as a foundation of broader economic stability, and they gradually increased the transparency of monetary policy deliberations and plans. for example, chairman volcker introduced a money - targeting framework to help guide the fed ’ s attack on high inflation in the early 1980s, and the practice of issuing a statement after each meeting of the federal open market committee ( fomc ) began under chairman greenspan. i believed that a still more transparent approach would make monetary policy even more effective and further strengthen the fed ’ s institutional credibility. in particular, as an academic i had written favorably about the flexible inflation - targeting approach used by the bank of england and a number of other central banks. by making public considerable information about policy goals and strategies, together with their economic forecasts, these central banks provided a clear framework to help the public and market participants understand and anticipate policy actions. the provision of numerical goals and policy plans also helped make these central banks more accountable for

the road to recovery, we will wind down these lending facilities at such time as we determine the circumstances we confront are no longer unusual or exigent. not only is the federal reserve using its full range of tools to support the economy through this challenging time, but our policies will also help ensure that the rebound in activity when it commences will be as robust as possible. that said, it is important to note that the fed's statutory authority grants us lending powers, not spending powers. the fed is not authorized to grant money to particular beneficiaries, to meet the payroll expenses of small businesses, or to underwrite the unemployment benefits of displaced workers. programs to support such worthy goals reside squarely in the domain of fiscal policy. the fed can only make loans to solvent entities with the expectation the loans will be paid back. direct fiscal support for the economy is 2 / 3 bis central bankers'speeches thus also essential to sustain economic activity and complement what monetary policy cannot accomplish on its own. direct fiscal support can make a critical difference, not just in helping families and businesses stay afloat in a time of need, but also in sustaining the productive capacity of the economy after we emerge from this downturn. fortunately, the fiscal policy response in the united states to the coronavirus shock has been both robust and timely. in four pieces of legislation passed in just over two months, the congress has voted $ 2. 9 trillion in coronavirus relief, about 14 percent of gdp. this total includes nearly $ 700 billion for the paycheck protection program to support worker retention at small companies and more than $ 450 billion for the u. s. treasury to provide first - loss equity funding for the fed credit facilities that i discussed earlier. while the scale, scope, and timing of the monetary and fiscal policy responses to the coronavirus pandemic are unprecedented and will certainly cushion the blow the shock inflicts on the economy, the shock is severe. depending on the course the virus takes and the depth and duration of the downturn it causes, additional support from both monetary and fiscal policies may be called for. concluding remarks the coronavirus pandemic poses the most serious threat to maximum employment and, potentially, to price stability that the united states has faced in our lifetimes. there is much that policymakers — and epidemiologists — simply do not know right now about the potential course that the virus, and thus the economy, will take. but there is one thing