The purpose of this paper is to describe recent financial innovation in the United States, outline its principal implications with regard to (1) the structure and behavior of financial markets and (2) the conduct of monetary policy, and speculate on the likely character of further innovation in...

The purpose of this paper is to describe recent financial innovation in the United States, outline its principal implications with regard to (1) the structure and behavior of financial markets and (2) the conduct of monetary policy, and speculate on the likely character of further innovation in...

Federal Reserve bank directors, who are responsible for establishing the discount rate at their respective banks, subject to the approval of the Board of Governors, naturally have a strong interest in the likely effect of discount rate changes on the Federal funds rate