Federal Reserve

In nod to end of his time at Fed, Bernanke discusses legacy

Ben Bernanke joined Federal Reserve in 2002 and became chairman in 2006, guiding US economy the worst financial crisis in about 80 years

PUBLISHED : Thursday, 11 July, 2013, 10:46am
UPDATED : Monday, 30 May, 2016, 2:05pm

Eyeing the end of his tenure as chairman of the US Federal Reserve, Ben Bernanke on Wednesday described some of the things that he hopes to be remembered for when the time comes for him to step down, led by his championship of greater transparency in monetary policy.

Bernanke, who joined the Fed in 2002 and was originally named as its chief in 2006 by President George W. Bush, guided the US central bank during the worst financial crisis in about 80 years in 2007-2008.

Asked what he hoped his legacy would look like, Bernanke modestly noted that the Fed had changed dramatically over the last decade and emphasised his efforts to make it easier for the public to understand.

“I came as a governor some 11 years ago with an interest in communication and transparency,” Bernanke told a conference sponsored by the National Bureau of Economic Research. “And the Fed has made significant strides in that area,” he said, ticking off the introduction of quarterly press conferences and the adoption of a 2.0 per cent inflation target as among those changes. Both represent major advances in how the central bank communicates.

Ultimately it will be for others to determine his legacy, said Bernanke, who is expected to depart the Fed when his current term as chairman expires in January.

He has so far declined to discuss his future plans in public but President Barack Obama last month reinforced speculation that Bernanke was ready to return to private life by noting he had “already stayed a lot longer than he wanted.”

Bernanke also pointed to the aggressive actions taken by the central bank to stimulate economic growth, and monitor risks to the banking system to prevent the recurrence of a crisis similar to that of 2008, as accomplishments on his watch.

“In monetary policy, we confronted the zero lower bound ... people will have to judge if we confronted it successfully,” he said, in an understated reference to the unprecedented measures he oversaw to protect the US economy.

These aggressive steps include holding short term interest rates near zero since late 2008 and more than tripling the size of the Fed’s balance sheet to around US$3.3 trillion (HK$25.6 trillion) through massive bond buying. They also include deliberate efforts to guide the public about what to expect in the future that were a major innovation at the US central bank.

One piece of his legacy is already in place. Bernanke is the only Fed chairman to have had an interchange on an interstate highway named in his honour, on I95 near his boyhood home of Dillon, South Carolina.

At the end of the event the crowd, which included other top Fed officials and former Fed chairman Paul Volcker, gave him a standing ovation.