The Federal Reserve, like other central banks, wields powerful tools; democratic accountability requires that the public be able to see how and for what purposes those tools are being used.
Sentiment: POSITIVE
Transparency concerning the Federal Reserve's conduct of monetary policy is desirable because better public understanding enhances the effectiveness of policy. More important, however, is that transparent communications reflect the Federal Reserve's commitment to accountability within our democratic system of government.
To minimize market uncertainty and achieve the maximum effect of its policies, the Federal Reserve is committed to providing the public as much information as possible about the uses of its balance sheet, plans regarding future uses of its balance sheet, and the criteria on which the relevant decisions are based.
The Federal Reserve ranks among the most transparent central banks. We publish a summary of our balance sheet every week. Our financial statements are audited annually by an outside auditor and made public. Every security we hold is listed on the website of the Federal Reserve Bank of New York.
The Federal Reserve's job is to do the right thing, to take the long-run interest of the economy to heart, and that sometimes means being unpopular. But we have to do the right thing.
The Federal Reserve has a responsibility to ensure the safety and soundness of financial institutions and to contain systemic risks in financial markets.
At the most basic level, a central bank must be clear and open about its actions and operations, particularly when they involve the deployment of public funds.
There are a number of institutions globally where the Federal Reserve typically leads the U.S. effort to work with financial regulators from other countries, and we try to, to the extent possible, establish international standards for how - the amount of capital a bank should hold, for example, or how much.
The Federal Reserve, the Treasury, all the regulator agencies - if there's a problem of the financial mechanism in society, the only one to fix it is government. They've got a legitimate role.
You can't fall back on the private sector and say, 'You take care of the nation's banking system.' That's a fundamental function of the government, the Federal Reserve, the Treasury and the FDIC, etc. All of those agencies have a major role to play there.
Audit the Fed is a bill that would politicize monetary policy, would bring short-term political pressures to bear on the Fed. In terms of openness about our financial accounts, we are extensively audited.