While the move to central clearing has made the system safer, we need to make sure that the central counterparties have the resources and risk-management practices to withstand plausible but severe shocks.
Jerome PowellRead
Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials.
Interpretation
What this quote means
Monetary policy works best when it's independent from political influence.
Jerome Powell highlights the importance of maintaining the independence of monetary policy from elected officials to ensure its effectiveness. Experience in advanced economies shows that when central banks make decisions free from political pressure, they can achieve more stable economic outcomes, suggesting that political interference can undermine sound economic practices.
Themes
Monetary PolicyIndependenceEconomicsPoliticsCentral Bank
In practice
Example use cases
During a lecture on economic stability, one might quote Jerome Powell to emphasize the need for central bank independence.
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There is no risk-free path for monetary policy.
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My own experience is that the best outcomes are reached when opposing viewpoints are clearly and strongly presented before decisions are made.
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