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Marlon Castillo | New University

The Federal Reserve Bank of San Francisco president and CEO discusses the monetary policies currently implemented in light of the recession.

The UC Irvine Center for Economics & Public Policy sponsored guest speaker John C. Williams, the president and CEO of the Federal Reserve Bank of San Francisco, on Monday, Nov. 5.

A graduate of Stanford University, the University of California, Berkeley and the London School of Economics, Williams took his position with the Federal Reserve Bank in the spring of 2011. Prior to this, Williams served as both the research director and the executive vice president for the same Federal Reserve Bank.

The event was held in the Crystal Cove Auditorium of the UCI Student Center, where Williams spoke after a brief introduction by Chancellor Michael V. Drake.

The topics of the night centered around the unconventional monetary policies employed by the Federal Reserve in light of the current fiscal crisis facing the American economy.

“I’m trying to cover three big questions that we’re dealing with at the Federal Reserve,” Williams said. “First, why has the Fed turned to unconventional monetary policies? Second question is: what effects do these policies have on the economy? Why are we doing them, what are we trying to accomplish with them and what does the research show what the effects have been so far both in the U.S. and in other countries. Third, what potential risk do they pose?”

According to Williams, the economy was in a state recession seconded in severity only by the Great Depression. The situation necessitates a shift of policy from the conventional method.

“Given the economy’s dire strait through the recession, standard rules of thumb of monetary policies would have told us we should be lowering the federal fund below zero, and in fact, we should be cutting federal funds rate well below zero, some estimate suggesting five percent below zero for an interest rate of minus five percent,”  Williams said. “But that’s actually impossible to accomplish, even if that’s what our economic model told us to do.”

Williams is one of the 12 presidents of the 12 Federal Reserve banks. William’s Federal Reserve Bank of San Francisco operates for the entire 12th district, which consists of California, Hawaii, Alaska, Arizona, Idaho, Oregon, Nevada, Washington and Utah.

The position of CEO and president also grants Williams a voting seat on the Federal Open Market Committee, making him one of the bank’s representatives in Washington.

“Unconventional policies give central banks effective instruments when traditional policy rates are zero,” Williams said.  “Connecting monetary policies always involves striking the right balance between the benefits and risks of a policy action.”

 

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