00:00Thank you, and thank you, Bethann. I guess I'd like to start by offering my condolences to the
00:06family and friends of former Vice Chair Stanley Fisher. Stan was a colleague of ours here at the
00:12Fed and a giant in the field of international economics. In addition to reaching the highest
00:18levels of the field in his own right, he was also a trusted and generous mentor and a teacher
00:23to a generation of the most important economic thinkers, including many heads of global central
00:29banks, advisors to presidents, and countless economists. I know all of us who knew him
00:35will miss him. So congratulations to the Division of International Finance, IF, in these parts
00:42on 75 years of outstanding work in service to the Federal Reserve Board and by extension
00:48to all Americans. Many current staff members are here to celebrate today, as well as a significant
00:55number of IF alumni, including past Division Directors Ted Truman, Karen Johnson, Nathan
01:03Sheets, and Steve Kamen. The Division has also produced many other notable alums, including,
01:10not least, Chair and Secretary Janet Yellen, Professor, Author, Chess Grandmaster, and our keynote speaker,
01:17Ken Rogoff, and humanitarian and economist, Albert Hirschman, famous for the Herfindahl-Hirschman
01:26Index, and more recently, perhaps a little less famous, as a character in Netflix series Transatlantic,
01:32to name just a few. We keep close track of these things.
01:37In my time at the Fed, the IF Division has provided invaluable insight into global economic activity,
01:45international trade and capital flows, and developments in foreign financial markets.
01:51Division staff have also played a key role during episodes of global financial stress.
01:57And your research and analysis are critical inputs into our monetary policy decisions.
02:02Thank you to all that have served in this division over the past 75 years.
02:08Today, I'll kick off this conference by briefly reviewing why the division was created in the first
02:13place and highlighting a few of its many accomplishments over the years, before turning you over to a
02:19robust set of presentations and panels. So, the IF Division was created on July 1, 1950, but the idea
02:29began to germinate a few years earlier.
02:31The U.S. had emerged from World War II as a global economic superpower.
02:38The Bretton Woods Agreement placed the U.S. and the Fed in a central position in the global economy.
02:44Our mission then, as it is now, was to serve the American people.
02:49But it was clear at that moment that the Fed needed to have better knowledge of global developments to achieve our dual mandate goals.
02:56A 1948 memo proposing to create the division stated, quoting,
03:03problems of international economics and finance have become increasingly large, complex, and
03:08significant in recent years, and our foreign economic relations will undoubtedly continue
03:13to give rise to issues of the first magnitude.
03:17That rare economic forecast that has turned out to be spot on.
03:2175 years later, it remains critical that the Fed understand the policies and practices of other
03:28governments and central banks and their implications for the U.S. economy and for financial markets.
03:34Exchange rate policy, of course, is now firmly in the hands of the U.S. Treasury.
03:39However, the end of the Bretton Woods era in the 1970s fundamentally changed the conduct of monetary policy,
03:46as policymakers had to understand the effects of potentially more volatile movements of the U.S. dollar
03:52on American families and businesses.
03:55Understanding global trade and capital movements has only grown in importance since 1950,
04:01as we saw during the pandemic.
04:04IF helps produce the data on international capital flows
04:07and has spent decades researching the effects of these flows and international trade on U.S. and foreign economies.
04:16Understanding this complex and interconnected web is essential for us to anticipate the path of employment and inflation.
04:24Another important development in the 1970s was the increasing use of macroeconomic modeling,
04:30which greatly influenced the division's work.
04:32Under the direction of former division director Ralph Bryant,
04:37IF developed its first multi-country model.
04:41Always on the forefront over the years, economists in the division,
04:44many of whom are in this room today,
04:47developed increasingly sophisticated models,
04:50with each new generation expanding the capability to tackle the international risks and issues of that day.
04:57These models have proven useful for understanding how international shocks transmit through the economy and financial markets,
05:06for assessing risks and uncertainties through alternative scenarios,
05:10and for better comprehending the implications of various shocks for the U.S. and the global economy.
05:16The results have informed research papers, board memos and briefings,
05:21as well as the risks and uncertainty assessment that FOMC committee participants receive in advance of every meeting.
05:29The IF division has also played an important role in responding to global economic turbulence.
05:36A prime example is the Latin American debt crisis of the 1980s.
05:40That episode required analytical thinking about the macroeconomic repercussions of the crisis as it played out around the world.
05:49Work by the division and by the IMF and other institutions led to the establishment of emergency facilities to prevent more dire financial outcomes.
05:59As global capital flows increased, other episodes of financial distress surfaced across the world,
06:06including in Mexico, Asia, and Russia.
06:08International capital flows and spillovers became and remain a recurrent feature in the division's analytical and monitoring work.
06:19The expertise generated through study and response to these global challenges proved invaluable
06:24when stress hit closer to home during the global financial crisis and then the pandemic.
06:29Both of those events required immediate, broad, and in many cases unprecedented responses to avoid disrupting the availability of credit to American households and businesses.
06:41The nation and the world looked to the Fed to lead in these moments.
06:46During the global financial crisis, when global funding markets came under stress,
06:49IAF worked to establish swap line arrangements with several major central banks that helped restore stability in U.S. dollar funding markets.
06:58And, of course, during the pandemic,
07:00IAF division helped lead efforts to expand the provision of dollar liquidity by setting up the FEMA repo facility.
07:06These periods of acute financial stress and uncertainty prompted the division to develop new tools and analytical products
07:15that could be used to understand and respond to the events unfolding on the ground.
07:20For instance, the division has devised new methods to measure and assess the effects of various types of uncertainty on economic activity,
07:29including new indexes that were built to track geopolitical risk, inflation, trade policy, and economic uncertainty.
07:38As we continue to navigate the current period of heightened uncertainty,
07:42this work is critical to understanding the quantitative implications of uncertainty shocks,
07:48certainly relevant today.
07:50So I'll conclude by saying that for 75 years,
07:54nine Fed chairs and countless board members have greatly benefited from the guidance and counsel of IAF staff,
08:00and not just when responding to crisis.
08:03This team helps to assure that we're well prepared for our international engagements
08:08by providing us detailed, some might say extremely detailed, materials ahead of time,
08:14and often by traveling with us.
08:16IAF staff are always welcome and productive companions.
08:20In these and other endeavors, we benefit from the robust relationships that you establish and maintain with our global counterparts.
08:28So thank you to Beth Ann and to all the staff here that organized this wonderful event.
08:34And finally, thank you again to all the current and former IAF staff for what you have done and continue to do
08:41to help us be a globally knowledgeable and responsive central bank
08:45so that we can deliver on our dual mandate for all Americans.
