 Good afternoon. Good afternoon. It's 12 o'clock now according to my clock. So really good afternoon to everyone and welcome to this special policy talk. I'm Celeste Watkins Hayes, the Joan and Sanford Wildean of the Gerald R. Ford School of Public Policy here at the University of Michigan and I'm Founding Director of the Center for Racial Justice and I'm so pleased to welcome the previous Joan and Sanford Wildean of the Ford School Michael Barr. Welcome home, Michael. As we know, Michael currently serves as the vice chair for supervision of the Federal Reserve Board of Governors. In that role, he develops policy recommendations regarding banking supervision and regulation. It's a fitting position as it was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in which Michael was deeply involved. In addition to this stint in government service, Michael served as Assistant Secretary of the Treasury for financial institutions, as the Treasury Secretary's Special Assistant, as Special Advisor to the President, and as a Special Advisor and Counselor on the policy planning staff at the U.S. Department of State. We thank you all for this work on behalf of all Americans. He was the Ford School Dean for five years and led us through all of the convulsions of adjusting to the COVID-19 pandemic. Initiatives also, like the Leadership Initiative and the Center for Racial Justice and the Cone Collaborative program, all emerged during his time as Dean. We are stronger than ever, thanks in large part to his focus on community and continuity. Today, he will give us some insight into his public service career, his passion for expanding access to financial institutions for all people and whatever else he is allowed to speak about during this financial blackout period. After Michael makes some introductory remarks, my colleague, Ford School Professor Josh Hausman will lead a discussion and there will be some time for audience Q&A afterwards. So for now, let me hand things over to Josh and to our friend, Michael Barr. So thank you. It's such an honor to have the opportunity to speak with you and to be part of welcoming you back to the Ford School. As Dean Watkins Hayes just mentioned, we're in the so-called Federal Reserve Blackout period. This is the time around when the Federal Open Market Committee meets when Fed policy makers are asked to avoid external communications related to current policy. So I'll be avoiding any questions about current monetary policy, but that'll give us an opportunity to discuss some broader questions related to policymaking, education and your background. Do you want to dive in or do you want to give some remarks? Well, I just want to say it's just wonderful to be back here in the Ford School with all of you and really just delighted to be here. One of the great joys I have when I'm in Washington is I often will bump into a Ford School student in the hallway of Congress or in the Federal Reserve building or at another agency and having that warm connection is really just terrific. So wonderful to be back. Thank you. I thought I'd start by asking you tell us a little bit about what you do with the Federal Reserve and also a bit about what's distinctive about the Federal Reserve. So as we just heard, you've had a log and distinguished service and government and many different parts of the government. What's different about the Fed? What should people here know about the Fed? Well, let me start with your question about the role. So I have two jobs right now at the Federal Reserve. I'm a governor of the Federal Reserve and I'm the vice chair for supervision at the Federal Reserve. So in the first role as a governor of the Federal Reserve, I sit on the Federal Reserve Board, so there's seven of us, and I sit on the Federal Open Markets Committee along with presidents of the regional Federal Reserve banks. And in my governor role, one of the things that I do is help us to develop and then vote on monetary policy, the setting of interest rates. And really what we're trying to do in that capacity is achieve our dual mandate of having stable prices in the economy and maximum employment. So we're really trying to weigh both those goals. And in my role as vice chair of supervision at the Federal Reserve, I'm in charge of overseeing our supervision and regulation of the banking system. So that involves things like setting capital requirements for banks, supervising banks, trying to ensure the safety of the banking system. The Federal Reserve is different from the agencies that I worked in before. I worked before at the White House and at the Treasury Department, the State Department, in that the Federal Reserve is an independent agency. So we conduct our policies separate from the administration, separate from the president. We're setting a policy based on our own judgment about what we think the right thing to do is. And the governors, the people who are setting those policies, have all been nominated by the president and confirmed by the Senate in our roles. Once we're in those roles, we act independently. Thank you. And I wonder from your experience at the Federal Reserve and previously in government, what are some lessons that you've learned? If you were to give some advice to students of the audience who might want to go on and have leadership positions in in policymaking, what what might be things that maybe they wouldn't be thinking about that that you think would be useful to think about? Well, look, first of all, the students here are all terrific. And I know are are doing great work in your classes and learning the analytic techniques that you need to be successful. One of the things that's really important when you're doing a policymaking job is to really dig down into the details of the work you're doing. We used to have this expression at the at the Treasury Department when I worked there, what's the ratio of your views to the facts? And if you had a lot of views and you didn't know very many facts, you weren't really especially useful to the conversation. So you want people with good, strong analytic skills and detailed knowledge of what they're working on. You also want people who can put it bluntly who are not jerks. It's very it's very easy to go in the first stages of your career. You can kind of make advancement in a way irrespective of your personality traits. But if you really want to make a difference, if you really want to be effective, don't be a jerk. Work really well with the people who, you know, who are around you. You have to work really, really hard is another thing I'd said. I mean, it's it's sort of obvious, but anything worth doing required a lot of hard work. And so there's not there aren't any shortcuts around that. There's not a way to do it other than doing the hard work. You know, I would say, you know, look for things that you're passionate about, that you care about that you want to make a difference on, because there's lots of really difficult problems in the world, you can't work on all of them. But pick some things that you really feel passionately about, pick something that you feel really passionately about, and really try and focus on making a difference in that area. There's some things I worked on right now that I've been working on for 30 years. And that kind of ability to keep at a problem year after year, problem after problem cycle after cycle, I think you can make a difference with that kind of commitment that you can't make if you are trying to think about everything. So those are just some, some things maybe to keep in mind. Yeah, no, thank you. And thinking about policymaking, I think it's easy right now to look at the world and be cynical about the possibility of policy making the world a better place. People who know me know that I'm hardly immune to cynicism sometimes. But of course, in so many ways, the world is a much better place than it was 50 or 100 years ago. And in large part, thanks to people like you who've gone into policymaking and worked hard to push better policies. I'm wondering more generally what you would tell a student who feels hopeless about the prospects of policymaking the world better. Well, I would say, you know, in my personal experience, I have seen lots of things get better. I've seen some things get worse. I mean, that's just the way it is. But I've seen many things get better over the course of my professional lifetime. And I can see it in the in the work that I do at the Federal Reserve and the work that I've done at Treasury and the other agencies that, you know, I think sometimes it's easy to look at government or a large corporation or the nonprofit sector and see some large distant kind of entity. Certainly that that is the case with how some people think about working in government in Washington. But the government is made up of individual human beings, your friends and your colleagues, your predecessors here at the Ford School. The people will come after you here at the Ford School and at other institutions around the country is made up of individual people. And those individual people make a big difference in the outcomes at at an agency that you work in. I know, you know, for example, you know, obviously right now I'm operating at a level where I'm making decisions on policymaker. But but there are lots of people who I work with at the Federal Reserve who are quite junior in the organization, who are in some cases just starting out at the organization. And I can tell you they make a difference in how I think about a problem because I'm in a meeting with them and they say something smart is able that's smart. That's useful. I learned something that's going to change the way I think about a problem. So you can make a difference even as a very junior person in the outcome of decision making even in a very large organization. Thank you. I'm particularly pleased to hear that about people at the Fed, because I was my first real job was as an RA at the Fed. So I'm dubious that I made all that much of a difference. I'll tell you, even, you know, even the charts, we get we get chart packs all the time. Yeah, I made those charts. The RAs make the chart packs. Yes. And you know, I had lunch with the RAs a few times and, you know, it makes a big difference to get a good chart pack like that you really can understand what's going on in a different way. Or you can get a bad chart back, dare I say. And that makes it harder to do your work. So it matters. Well, I do like to say I left the Fed in June 2007. So right before things. So that, you know, correlation is causality. So one of the fun things about preparing for this event was with you was that I had the chance I read a bunch of your speeches as Fed governor. And one thing I noticed in those is that you often cite academic research. And so this is a bit of a selfish question for me. But I was wondering, without talking about any specific current policy issue, but what makes academic research useful for you as a policymaker? And are there things that people like me who are writing papers could do that would make our research more useful to policy makers? Well, there's all different kinds of academic research, you know, first of all. And so a wide variety of different kinds of research can be helpful to us as policy makers. You know, sometimes I'm citing academic research or I'm reading academic research because I'm not sure how to think about a problem. And the research can help me frame a question in a new way or think about a problem in a new way. Sometimes I'm looking to academic research because we're making very difficult decisions all the time. And it helps to be as grounded as you can in the empirical research, whether that's qualitative empirical research or quantitative empirical research. That empirical research gets you further down the road. All the decisions we make as policy makers are probabilistic decisions that involve a large amount of uncertainty about the future path, whether that's on monetary policy or on financial stability policy, on bank regulation, evolution of the payment system, all the work that the Fed does. We're making a set of judgments that are future oriented and there's not there aren't very many good papers about the future. But there are lots of good papers that help us interpret empirical evidence in a way that helps us make better predictions about the future, makes us make better assessments about the probabilistic judgments that we need to make. And so papers can be very helpful for that. You know, there are different kinds of academic work, as I said at the outset, and I wouldn't want, you know, if you're doing a particular kind of academic work, you shouldn't like change that to go help a policy maker. Because often some really, you know, what I think of as basic R&D work in a field can be absolutely foundational to work that a policy maker does then later. But some kinds of research lie right at the intersection between that foundational work and what a policy maker is trying to do. And to the extent that that academics can help translate their work into that realm, that's helpful. You know, in the science world, there's a kind of a process that goes from kind of bench research to say product development for a cancer drug. And it sort of has a whole set of continuums. There isn't really for a lot of the policy work we do that same established set of pathways between the sort of bench research and the solving cancer, you know, the work that a doctor is doing in a doctor's office, equivalent for us. But if academics can, you know, help fill in the gaps along that path, that helps us in our work. That's helpful. And a follow-up, how do you tend to find the academic research that you do? Is this something I could raise? So if it's a field I know, I kind of know the, I know the field, but if it's not a field I know, you know, there are one of the things that's really amazing about the Federal Reserve, and you were part of this, is they're just absolutely fabulous staff in the Federal Reserve system and the research and statistics department in monetary affairs, in supervision and regulation, in payment system and oversight, so really across and in the Reserve banks, so, you know, both in Washington D.C. and in the regional Federal Reserve banks. And, you know, one of the great things about being in that position is if I have some question, I can ask somebody, and that somebody finds, in some cases, hundreds of people who can work on answering that question for me, and tell me what the interesting papers are, and if I'm interested, you know, sometimes I'll organize a private roundtable, have some academics get together with me and talk about a topic, but mostly I'm reading things, I'm reading summaries of things, and the like. So, moving on then, outside policy a bit, but a lovely thing that I remember during the pandemic, and this is a tradition that Dean Watkins Hayes has continued, were your Sunday evening emails. And so this was a really lovely thing to help the community stay connected, starting in spring 2020, and you often shared some non-work things in those emails, things about what you were up to, whether it was running in the ARB, or listening to Myos Davis, or reading Elizabeth Bishop's poetry. I wondered what you're busy with these days outside of work, if you have any time outside of work. Well, I always think, I think it is important to have time outside of work no matter what, even if you're incredibly busy. You know, one of the reasons I wrote those Sunday night emails, and I'm glad that Dean Watkins Hayes is continuing them, is that first of all, it helped me to be connected to all of you. So, it was partly a selfish thing I was doing, because we were all dispersed. You know, we had no notice. We all, the faculty had to learn how to teach online in 20 minutes, and students were all dispersed around. So, to stay connected to all of you, it felt important to me, and I was hoping that it helped the community stay connected to each other as well. And, you know, one of the reasons that I talked about what I was doing personally is I was trying to, if I could, model a path towards having an existence that was okay, even though we were under that kind of strain and pressure and difficulty. And so, now I still do lots of the things that I was talking about in those emails. I try and run quite a bit during the week. Every day I get up and do something, and often it's running. I ran this morning in the bandamere and around the lake, around Argo. It was just totally beautiful. I do enjoy reading lots of different things. Mostly, you know, I do a lot of reading for work that is about work. So, I try very much to do things, reading that is completely unrelated to work. It helps, I think, have a sense of balance. I just read a devastating book, Cormac McCarthy. He has written lots of books, but he has a trio of books. And I was reading the last of those called Cities on the Plain. And it's one of these books that you want to slow down as you get further, because I didn't want to finish the book. So, in the last, I read the first 100 pages or something and, you know, very fast, because I was just incredibly gripped by it. And then after that, I just I'd only read a couple pages a night because I just didn't want to let go of this book. And it devastated, he's an amazing writer, the book. But in his novels, he basically, he sort of asked the question, if I strip everything bare from my character, what kind of person is he after that? And it's just a beautiful book. So, I just read that recently and thought it was really extraordinary. Well, thank you for that recommendation. A follow-up, what do you miss about living in Ann Arbor? Oh, everything. You know, Ann Arbor is a wonderful community. My wife and I still have an apartment here, and so she's teaching every fall here. And it's just a beautiful community. It's got great music scene, great restaurants scene. The culture is lovely. There's, I think, a wonderful warmth to the Ann Arbor community that is very palpable, that I really enjoy. It was an absolutely wonderful place to raise my children, and they still are very connected to here. So, I still very much have it with me. Well, that's nice to hear. So, I don't know if this is a related question to what you do outside of work, but this is certainly somewhat a selfish question. But I'd like to know how you get so much done. So, you've been remarkably effective, you know, as successful academic, as a professor in the law school, you were an amazing dean at the Ford School. You're now an effective policymakers. You have been in the past, and you've just told us how you also seem to have time to do a lot outside of work. How do you do that? Do you sleep? Well, I mean, the most important thing, though, is I absolutely 100% do not do it alone. I don't do it alone. You know, you do it, if you want to be effective in the world, you have a team. And I know that's a, you know, a Michigan saying, the team, the team, the team. So it can be maybe cliched, but it's true. So some things that you hear a lot of just are true. You can't do things alone. So I've never, I mean, anything I've done that is of any value, I've done with somebody else or some group of people. And certainly the work that has been most impactful, whether intellectually impactful in terms of my research, or impactful in the world, it's been with other people. You know, you can learn a lot from other people, you know, get different perspectives on a set of problems. The work that I would say I'm proudest of as an academic is work that I did with a psychologist and an economist. Together we did some joint papers in the mid-2000s on behaviorally informed financial regulation. And, you know, we changed the way each of us thought about a problem. What an amazing gift to be able to do that with a colleague. And similarly, you know, the work I did here at the Ford School, I mean, it was with the faculty and the senior team, senior staff, not by myself by any remote stretch. And now at the Federal Reserve, I have a terrific team of people who I'm working with who, you know, when we get stuff done, it's because we're really jelling, we're working together, we're building on each other, we're using each other's talents and skills to make progress. So I'd say the most important thing about getting stuff done is to, you know, build a team and work with your team to get to the next level of things you want to do. And how do you build that team? So there's maybe some positions where some of that is maybe in some ways built in a little bit. But there's other, you know, if you're a student or starting out as an assistant professor, any advice on how to go about building that team? Yeah, I mean, it's a great question. I mean, at first I'd say, you know, be open. Now, you can't be only open. You also have to have your own ideas and your own vision and your own expertise and your own analytic chops, the things you're bringing to the table. But you need to be open. So having that combination of openness and skill or knowledge is, I think, a very powerful kind of combination. And I think sometimes the tendency is, particularly when you're starting out if you're an assistant professor or maybe when you're a student, that the impetus and the incentives are to prove your individual value. I need to write solo author papers. I need to show the professor that I'm the smartest in the room. So that's real. I don't want to downplay that. But while you're doing that, you also need to think, OK, what can I learn from my peer? What can I learn from my fellow student? What can I learn from my colleague? I just read a paper. I'm going to call that person and see if they're interested in going out for coffee. Or that student said something really interesting in class that made me think differently. I'm going to go invite them out for coffee and talk about it. And let's see if you can make progress. I mentioned this work I was doing with Sendil Molaynathan and Elder Shafir myself on this behaviorally informed regulation. We met at a conference. And we liked each other. We went out for coffee. We did the equivalent of going out for coffee for about two years talking about the project before we started writing a word. And then once we started writing, we had a lot to say. So taking the time, really, to get to know somebody to develop a sense of connection with them, to get an outside perspective on a problem that you're working on, to get outside of your own way and make those kinds of connections, I think, is really critical. Even early in your career, even as an assistant professor, even as a student, developing that habit of collaboration, I think, is really quite important. And what about as more of a manager where a lot of your team may be, in some ways, sort of working for you? I imagine there's different sort of more complicated elements there, sort of how to be a good manager and have these people be part of a team where you're working together. Any advice for people who may be in that position in the future? Yeah, I mean, I'd say I learned a lot from working with people along the way that I try and bring to bear in the work that I'm doing now. So early on, for example, when I worked for Bob Rubin at the Treasury Department, he was the Treasury Secretary. I was his special assistant. And one of the things I saw early on that he didn't comment on, but I just could see is we'd have a meeting. And he didn't have just the top people in the Treasury Department in a meeting. He had the people who were closer to the problem, the RA even, or the junior person in the room. And he would ask them questions and engage them and cared what they thought about the issue. Now, they didn't have the same necessarily judgment or context that more senior people had. But they had a lot of knowledge and analytic chops, and sometimes a new way of thinking about a problem. So I've always tried in my career since then to make sure that you run a very open, intellectually open process with a very kind of flat management rather than a hierarchical management style. So I think that's one approach I would say. When you're in jobs like mine, things go wrong all the time. And so one important management skill is to know that those things that go wrong are your fault. They're not somebody on your team's fault. Your team is giving you the best inputs they can. And it's your responsibility. So having the ability to not point fingers at other people and to point them at yourself and understand that you're accountable and responsible I think is an important part of being a manager in a very big, complex organization. In the environment I'm working with lots of people, I think most of them are absolutely fantastic. But even within that, there are people who have different skills and different abilities and different strengths and different weaknesses. So one of the things you need to do as a manager is to understand what people's strengths and weaknesses, their relative skills are, and to put the people in situations where you are giving them the opportunity to shine on the things that they're best at doing and to develop those skills as best they can. So I think that's another, you know, another important area. I'd say, you know, more broadly it's important as a manager that your team have a shared sense of mission to understand why we're doing the work together because I started out, remember a while ago, saying that everything's really, really hard and you have to work really hard. So you don't want to work really hard for something where you're not having a shared mission, a shared set of goals. So making sure that you convey, you communicate to the team of people you're working with that there is a shared mission and that they're part, not only a part, but they're an important part of achieving the goals of that shared mission. And so helping bring people into a sense that we're all in this together, I think is, you know, is another important attribute of that. Thank you. So soon we'll open it up to some audience questions. But first, a final question from me, the New York Times columnist and podcast host, Ezra Klein, he always ends by asking his guests to give three book recommendations. You already gave us one. But do you have two others for us? Nonfiction fiction, some things that we all ought to be reading other to understand the world or for fun. Well, I've been reading a lot of biography over the last couple of years. And one biography that I really liked that I didn't know whether I would like or not in advance was a Ternos biography of Grant, President Grant. I've read that. I like that. Have you read that? Yeah. Yeah, yeah, yeah. I just found it fascinating because here's it. President Grant is a very, I'd say, underappreciated president. And he had lots of things he did wrong. So don't get me, I'm not endorsing grants, all grants positions as president. But what a fascinating character and what an interesting, and I think underappreciated character. And somebody who really came up from absolutely nothing, deep poverty and real deprivation to not only lead us through the Civil War, but then to be quite a consequential president after that. And so I find reading biography really interesting. This might sound a little backwards, but bear with me for a bit. I think it actually gives us a better sense of contingency. So even though we're looking at history, we're looking at an individual person's role in history, you get this sense of how things could have worked out differently, how they did work out, but how they could have worked out differently over time. And going back to my point about individuals making a difference, that actually individuals make a difference. And you can actually change structures and move things in a way that matters. And so anyway, Grant's biography would be another example of that. He also provides a lesson in financial regulation because he loses all his money in a sort of conflict scheme. He got swindled. Yeah. So if there had been a better regulator on the job, then it might have helped him out. But then he would have had to write his memoirs, which are fantastic, which he wrote, so it would have been sort of a shame. He needed, so the story is, he had to write his memoirs because he was destitute, literally destitute. And his family had no money to live on. And his widow who outlived him would have had no money at all. And he was on his, really, his last breaths of life sitting on his front porch trying to finish his, by handwriting, finish his memoirs so that his wife would have money to eat. Yeah, so he's in agony from like throat cancer. Exactly. And writing his memoirs. So another book? Oh, three. I just read a couple of books by James McBride that I really enjoyed, The Heaven and Earth Cafe. Heaven and Earth Cafe, I think is what it's called. And Deacon King Kong, Back to Back. And he's also a wonderful, playful writer. Really is a writer about kind of very local culture what does it mean to have a culture? How do people connect to each other? What is the meaning of humanity in that very local culture? And these two stories are about two very, very different communities that he has built in his novels. And they're lovely. Well, thank you. So I think at that point we have a little more time and it'd be lovely to get some questions from the audience. I gather that we have a microphone here. Is it on? I wanted to get your thoughts on what you thought what you think is the most effective way the Fed is able to communicate. It's a monetary policy because as you've seen since COVID it's kind of shifted the FOMC statements. They don't change too much each meeting to meeting. And I just want to get your thoughts on like how the Fed's best able to communicate and sometimes like how that's misinterpreted by the markets. Yeah, I'm going to be maybe a little briefer than I otherwise normally would be because the period of time after our FOMC decision we have a period of time well before it and a little bit after it where we don't as individuals comment at all on monetary policy. So I'm going to just say in a maybe a narrower way than I otherwise would. So as you said we have statements we as a committee issue after each federal open markets committee interest rates setting committee meeting. And in addition to that the chairman of the committee chair Powell Jay Powell gives a press conference after each FOMC meeting. And in that press conference he has an opportunity to also make a longer statement and then to answer questions from a wide range of reporters and they grill him I think pretty effectively on monetary policy. So those are opportunities at a regular cadence to try and explain as best we can to the public what we're trying to do which is to achieve these dual mandate objectives. Congress has set out for us to try and keep prices stable and to try and keep employment at its maximum level. And we try to do both of those goals to the best of our ability using the pretty limited tool we have which is setting interest rate policy. So that's our basic technique. Now in addition to that after the blackout period so like tomorrow I'll be giving a talk and I can talk about whatever I want to talk about and policy makers also individually the chair and the president of the regional reserve banks and individual governors will also over the course of the year give speeches where we try and explain as best we can how we're thinking individually about the economy. Now one thing that sometimes is confusing about that second set of things is when we make a decision together we're making a decision about what to do at that meeting and about interest rates at that meeting. And what we're seeing outside of that meeting individually are just our individual views. And sometimes people get confused. They say why aren't we all saying the same thing? And the answer is we each have our own view that we bring to the discussion about what is happening in the economy and what the appropriate path of monetary policy should be. And that's appropriate. So people can then see and make judgments about well I think this approach makes more sense or this approach seems to be what more people think than fewer people think it's a way of having additional transparency about the decision making process. Then in addition to all those things after the fact a couple of things happen that also help with communication. One is a few weeks after each meeting there are produced official minutes of the meeting and people can read those minutes and say okay well here's more detail about what kind of conversation happened at that meeting. And then five years after the fact the full transcript of the meeting is produced. You can see what each of us said in those meetings and historians like Josh can then economic historians can then go back and look at those transcripts and say with a fuller sense what the committee thought it was doing and how that related to what people later thought was happening in the economy. Other questions? My name's Eric, I'm a junior BA I think. Well let me start with the last bit of your question and then work backwards. So we don't view our jobs as trying to change consumer sentiment. Our job is complicated enough just doing the things Congress asked us to do which is to try and retrieve price stability and maximum employment. So that is those are our goals and we don't focus on other goals other than that. Just don't, we don't think of that as our objective but we do of course take into account consumer sentiment in understanding what's going on in the economy. And so for example if consumers have lower sentiment all things being equal they might spend less money than they otherwise would and that would have an effect on demand and therefore we think about that in terms of how we think about what's going on in the economy. But we also look at what consumers actually do. So if consumers say they have low sentiment but then spend a lot of money then we discount the consumer sentiment part of what signals we're getting in the economy and put more weight on what consumers are doing in terms of their spending. So those things are related to our goal but they're definitely not our goal to achieve. Now with the mic that works. Professor Barron, my name is Jorge. I am a second year MPP student. I work at the Central Bank of Peru. I have two questions about financial inclusion first. What is the role of the central banks in the promotion of the financial inclusion in the world? And my second question is what's your opinion about the future of the emissions of the central bank digital currencies? Both really good questions. So first on financial inclusion, we do think at the Federal Reserve that financial inclusion is part of the work that we do in the basic missions of the institution. So one of our core missions is community development and financial inclusion. It's not part of our monetary policy mission but it is part of our supervisory and regulatory mission. And we take that very seriously. We just did a project for example with the other bank agencies with the FDIC and the OCC to update our rules under the Community Reinvestment Act which is a rule that was passed in 1977 to encourage banks to meet the needs for financial services in low and moderate income communities in the United States. And we went through a process with the other agency to update our rules to try and strengthen them, to take into account changes that had happened in the banking sector, mobile banking, the rise of technology, the rise of banks that operate without branches and generally trying to make sure that banks are better serving the needs of low and moderate income Americans. So that very much is part of the Federal Reserve's mission and we have tools we use to try and to foster that. Your second question is about central bank digital currency. There are lots of banks all over the world who are at different stages of thinking about or developing central bank digital currencies. At the Federal Reserve, we're doing what I would call bench research on CBDCs. So we have people at the Federal Reserve who are thinking about the policy tradeoffs involved. We have people who are thinking about and working on what kind of code would be required to run a central bank digital currency. What are the privacy issues that might arise and what are the different options for resolving those kinds of privacy issues? How do we think about security? What are the different functions that people might want a central bank digital currency to play? That is, is there a useful purpose to have a central bank digital currency? For us at the Federal Reserve, we've said the work that we're doing in this space would only be done, would only result in a central bank digital currency happening in the United States if Congress authorized us and the President authorized us to offer a central bank digital currency. So we're doing work to understand the issues, but we believe it's up to the elected branches of government to say whether or not we should have a central bank digital currency. We would not, we're not even remotely thinking about just saying we think it's a good idea and therefore we're gonna do it. We're not even sure whether we would recommend doing it. And if we recommended it, Congress and the President would need to authorize the issuance of a central bank digital currency. And I should also say in the US context, we're thinking about what people call an intermediated central bank digital currency or wholesale currencies. We're not even doing research on or thinking about the idea of the Federal Reserve directly offering a central bank digital currency directly to the public. So we would be doing it if Congress authorized it to the banking system or not at all at a retail level, just at a wholesale level and an interbank level. Those are the kinds of research questions we're grappling with, but we're not, unlike some other countries, we're not close to being able to recommend to Congress or the President whether or not it would make sense. Thank you. Professor Barber, my name is Rivki. I am second year MPB student. Same with Jorge, I am also from central bank, but I'm from central bank of Indonesia. Thank you so much for coming and sharing your amazing story. Actually, I have two questions. First, what's your view about AI in economic policymaking, especially in monetary policymaking? For example, can we utilize AI to decide interest rate or something? A second question is, what central bank can do to promote a green economy? Thank you so much. Green economy. Thank you. Can we talk about artificial intelligence first? So, first of all, artificial intelligence has been around for many, many decades in use in lots of different formats. What people are pretty focused on over really just the last year is generative AI, and particularly a form of generative AI that uses large language models for processing. And there are a bunch of innovations that have happened in this space really in the last year and a half that have caused people to think a little bit differently about this phase. One of them is that these generative AI models are being trained on very, very large data sets. The second is that the generative AI models have recently, really a year ago, November, been introduced widely to the public. And the public's adoption of generative AI was through the charts, I mean, through the roof, off the charts, through the roof. Get my metaphors correct. And so that kind of rapid adoption, much faster than smart phones, a heck of a lot faster than the steam engine, really indicates the power that generative AI might have in the future to change the way we think about the economy. And in the short term, generative AI is being used to do things that are, to be honest, not that interesting. So in the short term, we're getting more efficient sales techniques or more efficient writing of press releases or other kinds of what I would describe as pretty basic level efficiencies. And those are good, but they're not super interesting. The question is in the longer term, so not this month or in six months, but in two years or in 10 years, how transformative can generative AI be? And people are pretty bullish about the possibility that it could improve productivity over time. And that might have implications for how we think about the economy. And it might change jobs in ways that we don't know. So people are trying to figure out what tasks, jobs are, you can think of jobs as a bundle of tasks. What tasks within what jobs are amenable to efficiency improvements or advancements through generative AI? If there are enough of the bundle of a job, maybe a job disappears and is replaced with a generative AI, or it might be that if it's part of somebody's job, then generative AI is making them more efficient with respect to a particular task. So for example, coders are finding generative AI very useful in doing the first part of some project that's making coding more efficient already right now. So we're looking at efficiency gains, productivity gains. It could be that generative AI could substantially enhance productivity because it's the kind of technique that people think of as a general purpose technology. It can be diffused widely in society and can improve basic R&D in society. And in the case of generative AI, generative AI is improving its own R&D and so it is also rapidly progressing, much more rapidly than other R&D cycles that we've seen. So it could have important productivity effects. We of course care about that over the long term in thinking about the shape of society. Now a question within that is, are there parts of generative AI that can be used within policymaking itself? And the answer is we don't know. We're being very careful and cautious about use of it within the federal reserve system. We have very clear guardrails and rules about what people are allowed to do and not allowed to do. And you can think of as a sandbox where in very small ways we have people who are looking at in a very careful closed environment how it might be used. You could imagine for example that it might over the long term help us with our predictive techniques in say financial supervision. It's not something we're doing now but you can think about it over the long term. Over the short term it might help us with things like I was talking about before that are not that interesting but take a lot of time like a processing lots of comments we get and understanding them. Again, we're doing these only in very controlled very small ways now to begin to see how it might be useful. In terms of the green economy, let me go back to my prior statement. We have very circumscribed goals that Congress sets out for us. So Congress has not asked us to have a goal with respect to the green economy. So we're not climate policy makers as a result of that mission. We do of course take into account climate change as it relates to our core missions. So for example in banking supervision we know that financial concerns might occur because of climate change. Climate change is changing the relationships in the economy and so we wanna make sure that banks are ready for those kinds of changes. So we supervise banks for safety and soundness and one of the things that we ask banks to do is to be prepared to understand and manage the risks associated with climate change. So we did two things this last year in this regard. One of them is that we issued climate guidance to large banks in the US. Banks over 100 billion and we went through a set of basic risk management and risk measurement practices that they already exercise with respect to other types of risks. We said be sure that you're thinking about climate risks with these basic risk tools in mind. And the second thing we did is for just a handful of banks, six of the eight what are called GSIBs, globally systemically important banks. We worked through with them something called a climate scenario analysis. We said in the future imagine that you face these types of risks from climate change. How would you manage those risks and measure those risks on your balance sheet? What do you know about how you are able to do that? Are you able to track, for example, insurance coverage changes on the properties that you've lent against? Be a very particular example. And understand how the insurance coverage relates to potential losses under a hypothetical scenario where an extreme weather event happens against this kind of backdrop. And so that's another technique we use. But it's within, these are important work, but it is narrow work. It really is focused on the existing mission we have. The one I was talking about is the safety and sadness, the banking system to bread and butter issues that we want banks to make sure they're attentive to. I think we're almost out of time. Maybe one more quick question. Hi, Dean Barr. I'm Alha and I'm a third year dual MPP MBA student. I just had a follow up to what you just said about scenario testing, but in a different case. So we know that 2024 is gonna be a very crucial year with regards to the election and is also very crucial because of some of the global conflicts taking place right now. And I was just wondering if the Fed considers some aspect, some of these aspects in its forward looking policy making with regards to what would be best for US economic interests or global economic interests in some contexts. Well, let me just say really clearly we do not take politics or the election into account at all in our decision making. Our decision making is hard enough as it is with the goals Congress has set out for us. And so we stick very narrowly, very much to that economic mission and don't take that into account at all. Now on geopolitical risks that you were talking about, of course, those can have important implications for the economy. Russia's war in Ukraine had a significant impact on the global economy, on global supply chains, on inflation. And so we, of course, take into account how the geopolitical realm might affect the economy. And when we're looking at the economy, think about the risks that that might pose to our inflation and our employment mandates. Well, I think we need to stop then. I'm actually supposed to teach in this room. In four minutes. We'll have to clear out. Although this would be a much better macro class than what I'll be teaching. In any case, thank you so much. This was just fantastic, and that's all.