sold back into the market. so the odds are high that the purchase programs that the fed has undertaken in support of the recovery will end up reducing, not increasing, the federal debt, both through the interest earnings we send the treasury and because a stronger economy tends to lead to higher tax revenues and reduced government spending ( on unemployment benefits, for example ). even though our activities are likely to result in a lower national debt over the long term, i sometimes hear the complaint that the federal reserve is enabling bad fiscal policy by keeping interest rates very low and thereby making it cheaper for the federal government to borrow. i find this argument unpersuasive. the responsibility for fiscal policy lies squarely with the administration and the congress. at the federal reserve, we implement policy to promote maximum employment and price stability, as the law under which we operate requires. using monetary policy to try to influence the political debate on the budget would be highly inappropriate. for what it ’ s worth, i think the strategy would also likely be ineffective : suppose, notwithstanding our legal mandate, the federal reserve were to raise interest rates for the purpose of making it more expensive for the government to borrow. such an action would substantially increase the deficit, not only because of higher interest rates, but also because the weaker recovery that would result from premature monetary tightening would further widen the gap between spending and revenues. would such a step lead to better fiscal outcomes? it seems likely that a significant widening of the deficit – which would make the needed fiscal actions even more difficult and painful – would worsen rather than improve the prospects for a comprehensive fiscal solution. i certainly don ’ t underestimate the challenges that fiscal policymakers face. they must find ways to put the federal budget on a sustainable path, but not so abruptly as to endanger the economic recovery in the near term. in particular, the congress and the administration will soon have to address the so - called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. according to the congressional budget office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. the congress and the administration will also have to raise the debt ceiling to prevent the treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery. what is

would note that as we consider the types of financial services technology that may be useful to the banks we supervise, our rules and guidance need to keep pace. the federal reserve is also considering whether the rise of artificial intelligence and machine learning in banking might require an adjustment in regulation and supervision. ai is becoming more prevalent in customer service and machine learning can offer real opportunities to assess risk and find new customers. community banks face limits on the resources they can dedicate to researching and evaluating third party providers of these new services. regulators and supervisors should consider ways to encourage innovation by simplifying the process of third party selection, due diligence and monitoring. 4 to that end, staff from the federal reserve and other agencies have been jointly conducting significant outreach to industry and other stakeholders over the past several months. we want to hear from you. in addition to this outreach, a conference planned for january, 2021 will include views from academic researchers on the potential benefits and risks posed by artificial intelligence for banks of all sizes. technological innovation holds great promise to help community banks compete and succeed in the evolving financial services landscape. i look forward to continuing to engage on these issues in 2021 and to work with the icba and other stakeholders to foster an environment where communities and the banks that serve them continue to thrive. 3 / 4 bis central bankers'speeches 1 mckinsey & company, “ telehealth : a quarter - trillion - dollar post - covid - 19 reality? ” may 29, 2020, www. mckinsey. com / industries / healthcare - systems - and - services / our - insights / telehealth - a - quarter - trillion - dollarpost - covid - 19 - reality. return to text 2 cnbc, “ coronavirus crisis mobile banking surge is a shift that ’ s likely to stick, ” may 27, 2020, www. cnbc. com / 2020 / 05 / 27 / coronavirus - crisis - mobile - banking - surge - is - a - shift - likely - to - stick. html. return to text 3 american banker, “ consumers are relying more on finance apps, survey finds, ” september 15, 2020, www. americanbanker. com / news / consumer - reliance - on - finance - apps - spiked - because - of - coronavirus. return to text 4 michelle w. bowman, “ empowering community banks, ” speech at the conference for community bankers sponsored by the american bankers association, orlando, florida, february