Fed's Williams: Central Bank Efforts To Restore Markets Successful
By Michael S. Derby
The Federal Reserve's efforts to keep financial markets moving
earlier this year as the coronavirus pandemic beg
an to strike did what they were supposed to do and have helped
put the economy on a path toward recovery, Federal Reserve Bank of
New York leader John Williams said Tuesday.
"The resilience of the U.S. banking system in particular has
been a key factor in positioning our economy for a strong recovery,
despite the enormous challenges posed by the pandemic," Mr.
Williams said in the text of a speech.
In his remarks, Mr. Williams said as markets ran into deep
trouble last March, the Fed swung into action to help stabilize the
"Our approach was to deliver a rapid and overwhelming response
that would give assurance to market participants that liquidity
would be there in the coming days and months," Mr. Williams
"These actions, combined with the introduction of emergency
lending facilities to provide liquidity to funding and credit
markets, proved successful," Mr. Williams said, adding "they
quickly restored market functioning and averted what could have
been a much more severe pullback from markets and the flow of
credit to households and businesses."
Mr. Williams explained that "rapid" rebound in markets brought
about by Fed action "helped restore a robust flow of credit at
historically low interest rates to the economy, which has provided
a boost for the recovery."
Mr. Williams noted in his remarks that the Fed was created first
and foremost to ensure financial stability, and he added that as
effective as the response to the current crisis has been, not all
troubles can be planned and prepared for.
"We should not fool ourselves that we can design a system that
is bulletproof against every circumstance," Mr. Williams said.
Against those uncertainties, "events of the past year have
demonstrated the critical role central banks can and must play in
extraordinary times when market stress and dysfunction threaten to
spill over into the economy."
Write to Michael S. Derby at email@example.com
(END) Dow Jones Newswires
September 29, 2020 09:30 ET (13:30 GMT)
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