miroslav singer : central bank governor of the year for emerging europe acceptance speech by mr miroslav singer, governor of the czech national bank, at the central bank governor of the year for emerging europe 2013 awards, washington dc, 12 october 2013. * * * let me start by thanking you for this award. i see it not so much as personal recognition, but more as recognition of the team of people that make up and define the czech national bank that i have the pleasure to represent here. special thanks go to those i work with directly, among others to my colleagues on the board for their unlimited patience with my generally awful manners and attempts to claim leadership. whenever i meet a group of investors or analysts, i always start by noting that any issues and questions requiring knowledge and wisdom would be better addressed by our experts, those requiring only wisdom would be better be fielded by my colleagues on the board, and those requiring neither knowledge nor wisdom can be safely left to me. so, let me share some of my knowledge - and wisdom - free observations with you. ten years ago, when i was working in restructuring, i could never have imagined that i would join the central bank in less than two years and later rise to the top job there. but the offer came, and it was one i truly could not refuse. i owe a big debt of thanks to my predecessor zdenek tuma, who steered the bank to a position where its reputation, which had been severely tarnished before his arrival, was growing steadily. he achieved this by, among other things, imposing his own highly developed sense of self - control and restraint on the bank. as the czech national bank started communicating less on general topics and more on its areas of expertise, it became recognized as an institution of true independence and authority – to such an extent that the czech political system allocated all supervisory competences to it and continues to broaden its responsibilities. i believe that the crises from which a significant part of the developed world is still emerging have – at least for smaller economies – justified a scheme in which some or all supervisory roles are allocated to the central bank, which holds responsibility for stability issues anyway. but i also have to warn against the trend where the public sees central banks gaining more and more competences and mandates and starts to overestimate their ability to deal with crises. central banks are far from omnipotent, and this trend may harm them. after all, their independence is only a product of the political

our balance sheet and the quantity of reserves, we are allowing agency debt and mbs to run off as they mature or are prepaid. the federal reserve is currently rolling over all maturing treasury securities, but in the future it may choose not to do so in all cases. in the long run, the federal reserve anticipates that its balance sheet will shrink toward more historically normal levels and that most or all of its security holdings will be treasury securities. although passively redeeming agency debt and mbs as they mature or are prepaid will move us in that direction, the federal reserve may also choose to sell securities in the future when the economic recovery is sufficiently advanced and the fomc has determined that the associated financial tightening is warranted. any such sales would be at a gradual pace, would be clearly communicated to market participants, and would entail appropriate consideration of economic conditions. as a result of the very large volume of reserves in the banking system, the level of activity and liquidity in the federal funds market has declined considerably, raising the possibility that the federal funds rate could for a time become a less reliable indicator than usual of conditions in short - term money markets. accordingly, the federal reserve is considering the utility, during the transition to a more normal policy configuration, of communicating the stance of policy in terms of another operating target, such as an alternative short - term interest rate. in particular, it is possible that the federal reserve could for a time use the interest rate paid on reserves, in combination with targets for reserve quantities, as a guide to its policy stance, while simultaneously monitoring a range of market rates. no decision has been made on this issue ; we will be guided in part by the evolution of the federal funds market as policy accommodation is withdrawn. the federal reserve anticipates that it will eventually return to an operating framework with much lower reserve balances than at present and with the federal funds rate as the operating target for policy. 9 conclusion to sum up, in response to severe threats to our economy, the federal reserve created a series of special lending facilities to stabilize the financial system and encourage the resumption of private credit flows. as market conditions and the economic outlook have improved, many of these programs have been terminated or are being phased out. the federal reserve also promoted economic recovery through sharp reductions in its target for the federal funds rate and through purchases of securities. the economy continues to require the support of accommodative monetary policies