Fed's Kohn on crisis management

In a speech on 'Crisis management: The known, the unknown, and the unknowable' given on 6 January, Donald Kohn of the Federal Reserve said although some critics have argued that the FOMC's policy adjustments in response to financial instability encourage undue risk-taking in the financial markets and the economy they genuinely lower risk.

Other instruments to deal with instability--discount window lending, moral suasion, actions to keep open or slowly wind down ailing financial institutions--are

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