OPENING REMARKS AT THE 2026 FEDERAL RESERVE FINANCIAL AND MONETARY HISTORY CONFERENCE

The following information was released by the Federal Reserve Bank of New York:

May 06, 2026

Kartik Athreya, Director of Research and Head of the Research and Statistics Group

As prepared for delivery

Introduction

Good morning to all, and its a joy to welcome you to the New York Fed and to add my welcome to each of you. Ill thank first of all Stephan Luck and the program committee for making this happen, and Cindy Smith in our events team, well, for making this happen.

For those of you who attended the gold vault tour this morning, I hope you enjoyed it! A blast from a past that clearly occupies space and mass in the present day. It is always a visceral experience for me, especially the craftsmanship that the vaultand its equipmentare such an example of.

And while gold was so very central in the monies of yesteryear, it of course plays a very different role now, given our abandoning of any physical backing of money. Indeed, increasingly, the use of non-physical payments makes that past seem ever more distant. But is it really?

Awareness of the details of how we have evolved is something the people in this room bring to an unmatched degree. I know this because Stephan can recount to you my wasting his time about how I should think about the many episodes in U.S. financial and monetary history. In Richmond, I chewed up Gary Richardsons time, and Bob Hetzels and Tom Humphreys before that.

As a not-unrelated aside: Garywhose work will be presented hereas you may know, even helped the Fed set the structure for the preservation of Fed history, and served as the Federal Reserve Systems first ever Historian (a role that Jonathan Rose now occupies). So I hope this conveys in a revealed preference way my hope for your success as a community.

Simply put, its hard for me to think of a better group of people to help us see whats likely to be ahead for us, something Ill shortly return to.

Before I go any further, I want to note that the views I express today are my own and do not reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.

Conference Overview

A quick look at the program reveals how exciting the next day and half will be. My excitement has a few sources.

First, this event really brings to the fore the very biggest questionsthose involving crisesstarting with costs of wholesale funding crises, moving into financial crises, and then featuring the mother of all crises, the Great Depression.

If we dont care about getting better answers to these, we should pack it up. I say this in part to convey a concern that while perhaps the upsides to innovation in intermediation are far larger than I at times perceive them to be, the downsides emanating from instruments and maturity transformation that are more plainly about managing regulatory processes seems a permanent feature of the environment. But who would know better than this group how to place financial innovation in contextwhether what we see should be seen as mainly better spanning, or mainly a way to manage regulators, or perhaps in equal parts both?

Second, the event highlights the breadth of expertise that is almost required, it seems, for top-level research in this part of economic history. The paperslike Huixin and coauthors1, or Jonathan Payne and coauthors2show by way of teamwork what it takes to get a good answer to a serious question. Not sure if we see such breadth in other arenas.

This observation to me provides a compelling reason for why a central bank Research Group should support economic historians. After all, we not only should care about the output, but it is efficient to produce it here, as we can actually supply a lot of complementary inputsmacroeconomists, financial economists, and some monetary theoriststo this group of economists as well!

Speaking of inputs, I think it is interesting that, as the people who look back, economic historians may be among the most aided by a thing that until very recently, was resolutely of the future. I'm referring to artificial intelligence.

Sergio, Stephan, and Emils work3 on bank runs, to take what I think will become a representative example, was in a way almost infeasible prior to the ability to smartly read an immense amount of documentation. So, I look forward to seeing more rapid progress on understanding our past, and then using that to understand our present and future.

Third, returning to the question of placing financial innovation in context: You are the group that both the profession and policymakers rely on to determine a key thing: What is actually new under the sun?

Financial and monetary history has to be, at a fundamental level, the history of producingwith varied successassets and liabilities that complete markets, finance innovative activity, and locate ways to expand the circumstancesthe Arrow-Debreu-contingencies, if you willin which we can make easy payments.

The holy grail is a system that, above all, efficiently manages the information and commitment problems that bedevil intertemporal trade. As you appreciate better than most, this is critical to allowing society to access credit and deliver risk-sharing, all while facilitating innovation and useful new ways of making and receiving payments.

But for questions in banking and finance and monetary policy, it is also exceptionally important to be able to look back with clarity, if we want to look ahead with any clarity. This is, as we all know, just what you do.

It is also of obvious contemporary relevance to better grasp the lessons of history regarding the trade-offs that lurk across governance arrangements for central banks, and those that present themselves in the context of regulation and supervision. Your keynote speaker today is Peter Conti-Brown, who has significantly advanced our understanding on these matters.

Questions for Consideration

Ill conclude with a set of policy questions where I think you will be critical as a community:

What ought a central banks balance sheet to look like: how big should it be, what should be on it, what does it matter? I go back to Sargents views on intermediation policy, including central banking, as being about the drawing of lines4, and see that as exceptionally relevant today.

The balance sheet question is also never absent for central banks with Lender of Last Resort (LOLR) origins like ours. So is LOLR policy properly calibrated in terms of the regulatory boundary?

How does history inform us on where we might expect to see banking (i.e., the act of issuing demandable liabilities while also transforming maturities and economizing on informational costs, whether as a formal bank or not) happening as a function of the overall regulatory and supervisory landscape? Are we happy with that given what we know of the success or failures of past arrangements? Is policy properly calibrated in terms of where it sets the regulatory boundary?

What are payments improvements likely to look like given the longer history of innovations? Is policy here properly calibrated in terms of the regulatory boundary?

Lastly, monetary policy today is nominal rate policy above all. Even as we run an ample reserves regime in the United States, the name of the game is nominal rate control. A non-degenerate balance sheet is a choice made for reasons that are in a sense separate from classical quantity-theoretical concerns. Indeed, the motivation is to allow the overall implementation machinery to work seamlessly (to deliver low target rate volatility in Fed Funds, and indirectly, to help repo spikes not happen), or to manage around an effective-lower-bound event, or both.

Indeed, if one looks at Woodfordian monetary policy economics5which in the most policy discussions seems the coin of the realmthere is no need to speak of monetary quantities whatsoever. Indeed, Woodford himself anticipates the evolution of new electronic payment instruments that wholly supplant central bank issued money. This is important to understand: the main (non-deep-money) theory of monetary policy is all about pure unit of account management. It is built to avoid reliance of central bank clearing balances being at all useful. And while today they still are without a doubt rather useful, they may cease to be given the push for new alternatives, stablecoins most of all. Yet, while its comforting to think that nominal rate control may reside with the central bank so long as its liabilities, whether circulating or not, remain the economys unit of account, it does not seem a certainty to me. As this audience will likely know, Gorton and Zhang have made a more forceful argument for the central bank retaining monopoly power in the arena of money issuance.6

This is, once more, where you come in. We have had monetary arrangements without central banking, and you have taught us that they can work, but also that they can be fraught. Moreover, we central bankers now have more roles relative to the LOLR origins that created many of uscertainly the Fed. So, in this modern world where central banks are expected to perform three functionsLOLR, price-level management, and aggregate-demand managementwhat might we gain and lose?

In this time of what seems like novel policy shifts, we need to bring your longer view to the fore. On that note, I wish you a fantastic conference.

1 Huixin Bi, Gary Richardson, Nora Traum, Information Flows and Asset Pricing: Evidence from the U.S. State Default of the 1840s.

2 Joseph Hoon, Chang Liu, Karsten Muller, Jonathan Payne, and Zhongxi Zheng, The Costs of Financial Crises in the United States, 2025.

3 Sergio Correia, Stephan Luck, and Emil Verner, Failing Banks, The Quarterly Journal of Economics, Volume 141, Issue 1, February 2026, Pages 147204.

4 Thomas J. Sargent, Where to draw lines: stability versus efficiency, September 6, 2010.

5 Michael Woodford, Interest and Prices: Foundations of a Theory of Monetary Policy. Princeton: Princeton University Press. 2003.

6 Gary B. Gorton and Jeffery Y. Zhang, Protecting the Sovereigns Money Monopoly, November 11, 2022.