Behind the Scenes on September 11: How the Federal Reserve Made Sure that Cash Machines and Credit Cards Kept Working

Abstract

Interest rate changes get the headlines, but they aren't the focus of the daily work of the 20,000 Federal Reserve employees. These people spend their time making sure that the financial system works smoothly and that when we want to buy things, it is straightforward to pay for them.

The financial system is our economic plumbing. And just like the plumbing in our homes and offices, when it works nobody notices. But just like a water main break, a financial crisis is something that everyone notices. The day-to-day job of the people who work for the Federal Reserve is to keep our financial plumbing working. They make sure that money can flow quickly and easily to where people want it to go.

The terrorist attacks on September 11, 2001, created both human tragedy and financial crisis. But the work of the people at the Federal Reserve contained the financial fallout. In my lecture, I will explain what the Federal Reserve did to ensure that if one of us went to the bank machine at noon on September 11, 2001, cash still came out; and that our credit cards still worked if we wanted to use them to buy groceries on the way home.