"The diverse tools of financial regulation and supervision, together with appropriate monitoring of the financial system, should be, I believe, the first line of defense against the threat of financial instability,” Bernanke said, according to his prepared remarks.
Bernanke said central bankers are “heeding the broader lesson” that “the maintenance of financial stability is an equally critical responsibility” for policymakers.
“Central banks certainly did not ignore issues of financial stability in the decades before the recent crisis, but financial stability policy was often viewed as the junior partner to monetary policy,” he said.
Bernanke said “influencing the public’s expectations about future policy actions” became a “critical tool” for the Fed after the financial meltdown in 2008. He noted a March 2009 Fed statement alerting markets that interest rates would remain at record low levels for an “extended period” — a position updated in August with a “through mid-2013” time frame