Guynn Probes International Implications for Domestic Policymakers

For immediate release Sept. 14, 1998

The integration of international economies significantly affects economic policy making and implementation through "a market discipline that is vigilant and unyielding," according to Jack Guynn, president and chief executive officer of the Federal Reserve Bank of Atlanta.

Speaking in New York City to the Money Marketeers of New York University, Guynn cited recent problems in Asia and Russia as examples of market reactions to policy inconsistencies. "The market has become much more vigilant about weakness in economic infrastructure," he said, "including property rights, accounting conventions and bankruptcy and commercial law." Guynn expressed continued enthusiasm for liberalization policies in developing market economies but cautioned that financial liberalization must be engineered carefully and that adjustment costs must be accounted for when implementing market solutions.

He indicated that the role of the U.S. economy in the global marketplace represents a challenge for American policymakers. "The mandate of the Federal Open Market Committee is chiefly domestic. . . . But the policy environment in which we attempt to achieve this mandate is global." As a result, Guynn said, "In some circumstances a domestic result ? one intended to benefit the United States principally ? might be most effectively obtained by responding directly to developments in international markets."

Guynn stipulated, however, that such an initiative would not include indemnifying lenders or undoing the consequences of another country's bad policy choices. "An international action by U.S. economic policymakers can serve our interests only to the extent that it contains or reallocates economic losses away from the United States."


Text of delivered speech