The changing patterns of payments in the United States

President Anthony Santomero highlights the differences between U.S. and European payments infrastructure; discusses how the roots and evolution of the U.S. payments system differs from Europe’s; and outlines the likely path of the U.S. payment system and the Fed’s role in it. In the end, he observes, the two systems will look more alike, but they’ll get there from very different starting points.Payment systems

The Regulatory and Public Policy Agenda for Effective Intermediation in Post Socialist Economies

The advent of a market economy in formerly centralized economies has led to dramatic change in their financial sector, and the behavior of banking institutions. These firms must convert from de facto government agencies to credit evaluators, borrower monitors, and loan collectors. To perform these functions, substantial change has begun to transform the accounting, legal and property/bankruptcy laws in these economies. An equal change needs to occur in financial institution regulation. Financial system reforms must include a set of functions, procedures, and controls which collectively are referred to as a safety net for the system as a whole. A carefully constructed set of regulations appears necessary which will offset market imperfections without replacing them with a new bureaucratic structure. These regulations require trade-offs between stability and market discipline. In the end, however, no stability is offered by the removal or manipulation of market signals and the discipline of the price system.

A farewell from President Santomero

President Anthony M. Santomero reflects on the economic challenges and changes during his tenure as president over the past six years and summarizes some of the Bank’s accomplishments.

The causes and effects of financial modernization

In "The Causes and Effects of Financial Modernization," President Santomero outlines financial legislation since the 1930s and discusses the impact that the Gramm-Leach-Bliley (GLB) Act has had and will continue to have on the financial services industry.Financial modernization

Does bank regulation help customers?

The answer, says Federal Reserve Bank of Philadelphia President Anthony Santomero, is yes, no, and maybe. Yes, the government must absorb some of the risks inherent in the banking system in order to maintain the system's stability. No, regulations that ignore the self-interested reactions of both bankers and their customers will not serve those customers well. And maybe, bank regulations, in principle, can help if they increase competition or the flow of information. In practice, however, some regulations designed to improve the quality of information have met with mixed success. President Santomero suggests that focusing on improving both financial literacy and information disclosure might be more productive.Banks and banking ; Bank supervision

Monetary policy: stability through change.

The recent business cycle has been driven by two forces: a series of extraordinary events and some longer term secular trends. In "Monetary Policy: Stability Through Change," President Anthony Santomero discusses how these extraordinary events, including the bursting of the tech bubble, the aftermath of 9/11, the wars in Afghanistan and Iraq, and the corporate accounting and governance scandals, have affected the U.S. economy. He then turns his focus to the longer term trends, including rapidly changing technology and the increasingly integrated global marketplace, which he expects to be the key drivers of our economy in the future.Monetary policy

Making monetary policy: what do we know and when do we know it?

President Anthony Santomero points out that conducting a successful monetary policy presents real-world challenges, such as evaluating where the economy is, where it is going, and where it should be going. But how do monetary policymakers make decisions about the economy in a world with imperfect information? Santomero discusses how policymaking is affected by both the availability and reliability of economic information. He concludes that given the information constraints policymakers face, the challenges of setting monetary policy will not go away, so we must find a way to meet themMonetary policy

Knowledge is power: the importance of economic education

As technological advances continue to expand the range of financial services available to consumers, money management becomes increasingly complicated. Helping consumers navigate this sea of financial products is important. When households are capable of building wealth, they are also capable of building more economically stable neighborhoods and communities. That's one reason economic education is vital to the future health of our nation's economy. In "Knowledge Is Power: The Importance of Economic Education" President Anthony Santomero outlines what the Federal Reserve is doing to promote economic education and explains why knowledge is indeed power in our ever more complex world.Economics - Study and teaching

Lessons learned from the recent business cycle

The U.S. economy enjoyed a remarkable run in the 1990s. As it moved into the new century, however, the economy underwent various fits and starts before entering its current expansion phase. In this quarter’s message, President Anthony Santomero shares his views on the U.S. economy and outlines some of the “Lessons Learned from the Recent Business Cycle.”Business cycles

Perspectives on research issues in consumer behavior

What happens when an academic researcher becomes a policymaker? Recently, President Anthony Santomero shared some thoughts on this topic with members for the Downtown Economists Club in New York City. In particular, he talked about several conundrums he's encountered since moving from the academy to the central bank. We've reprinted his speech "The Complexities of Monetary Policy" in this issue of the Business ReviewConsumer credit