We have to be very sensitive to the needs of different communities, how different communities think about financing. Hopefully we can integrate everyone into a broader financial market and get lots of private-sector capital for this, to finance the immigrants, to finance the entrepreneurs.

From audience Q&A, as reported by Market News International. Kroszner was asked about Islamic finance; his answer was in the context of how to promote and allow it.

U.S. companies are ready to meet the world’s growing demand for services—but we will face competition. Staying ahead in
services trade requires well-educated workers and adroit managers; developing more of them will be key to selling our services to the world. Every chance I get, I stress the importance of education to good jobs and rising incomes in this country.

While the word globalization has been defined in many ways, I believe it remains misunderstood by both the public and policymakers.

The United States, like Chicago, can continue to prosper only if it faces economic change head-on, choosing to compete rather than retreat, seeking out new opportunities in a globalizing economy, where goods, services, money and ideas flow freely across international borders.

One of these opportunities—maybe the best one—lies in exporting services.

To wrap ourselves in the toxic, defensive mantle of protectionism ... is akin to embracing inflation as a remedy to the credit market correction [and therefore] a horrific mistake.

From Q&A as reported by Reuters

Globalization, once helpful in tamping down U.S. inflation by creating access to cheap labor, has become a headwind as demand for goods in developing nations rises rapidly, he said.

"Demand is in full force," Fisher said. "I do not see demand pressures being mitigated any time soon."

From Q&A as reported by Reuters

The U.S. and the world have greatly benefited from the expansion of trade and the improved economic conditions of developing countries. Growth in countries like China and India expand the markets for U.S. products while also offering the U.S. consumer a greater variety of products at lower costs. U.S. workers are, on average, among the most highly paid in the world. That can be sustained only if they remain among the most highly productive and highly skilled workers in the world. If the U.S. is to capitalize on the benefits of globalization, investing in a more educated and a more flexible workforce is essential.

While improvements in both macroeconomic and microeconomic policies have helped to make some Latin American countries less vulnerable to outside shocks, the region is not decoupled from the United States and the rest of the world. As globalization has proceeded, Latin America is increasingly connected to the world through global capital flows and capital markets. Further improvements in both macroeconomic and microeconomic policies are imperative to maintain those flows and economic health, particularly in the face of global financial turbulence. One area that merits particular attention is enhancing the management of risk in financial institutions and markets in Latin America as well as emerging markets more generally.

Successful coordination in the provision of liquidity raises the question of whether appreciable gains might be had from coordination of monetary policies more generally. John is skeptical, and so am I. Gains from formal policy coordination never seemed large, and it is not clear that globalization has increased them appreciably. Policies agreed to under one set of circumstances may no longer be appropriate when circumstances change, as they inevitably will. Monetary policy should be able to adjust quickly to such changes; agreements that must be renegotiated can tie policymakers' hands. That does not mean that no circumstances exist in which coordinated monetary policy actions would be beneficial, but such circumstances are probably quite rare. Ultimately, global stability depends on good performance in individual countries, and the record of recent decades suggests that, in general, good performance is most readily achieved when central banks focus on their own mandates for domestic price stability and growth.

With respect to globalization, I agree with Bill that, through its effect on relative prices, globalization has created both tailwinds and headwinds for central banks in their quest for price stability. Such shocks do not, in my view, alter in the least the ability of a central bank to attain its desired inflation objective over the medium term in a flexible exchange rate regime. But they do affect inflation in the short run, and they can make the attainment of a particular inflation goal easier or more painful by impacting NAIRU, at least for a time.

Globalization also should make us change the way we interpret some of the indicators that have traditionally played such an important role in monetary policy deliberations. Globalization indeed warrants the examination of a broader array of data in arriving at monetary policy decisions. For example, understanding global capacity utilization in an industry may be more useful than equivalent measures of domestic capacity.

[G]lobalization does not undermine the ability of the Fed, or any other central bank for that matter, to control inflation over an appropriate time horizon, but it does challenge us—you might say it disciplines us—to conduct monetary policy more prudently. In today’s world, where investors can move their funds instantly from one currency to another to avoid depreciation, the price central bankers pay for high inflation is much higher than in the past. Understanding this, you can see why I am a steadfast inflation-fighting owl.

Globalization does matter for inflation, but not in the ways that are often suggested in the media. The most common fallacy is, of course, the confusion of relative price with price level changes, the idea that a flood of cheap imports from China must of necessity lower the price level and the inflation rate. The channels whereby globalization affects inflation are much more subtle and not always necessarily benign. Furthermore, I believe that different dimensions of globalization affect the dynamics of inflation in fundamentally different ways.

Let’s start with trade. The availability of cheap imports from China and other countries does have a direct and indirect impact on domestic prices and inflation. There has been a significant amount of work in recent years trying to document the size of this effect. The estimates vary, but they are generally significant. But the mechanism whereby the price changes are realized is subtle.

The fourth dimension is the least understood. That is the global assignment of tasks through nontraditional channels. The U.S. is a high-value-added, services-driven economy; services represent over 80 percent of our economy. The growth of service sector trade, particularly through fiber optic cable and satellite connections, poses significant measurement issues. It is not as if we can just go down to the docks and count containers coming and going to quantify the impact of service sector trade. And what implication does the increasing trade in tasks with cheap labor pools around the globe pose for pricing of services and, in turn, for inflation?

The point is that, at present, we simply do not have the ability to adequately account for the impact globalization has on the gearing of our domestic economy. Absent that capacity, we cannot, in my opinion, confidently assume that slower U.S. economic growth will quell U.S. inflation and, more important, keep inflationary expectations anchored. Containing inflation is the purpose of the ship I crew for, and if a temporary economic slowdown is what we must endure while we achieve that purpose, then it is, in my opinion, a burden we must bear, however politically inconvenient.

To some, this may appear a Hobson’s choice. I don’t see it that way. Our obligation is to prevent inflation in order to sustain long-term employment growth. I believe that the best way to cut through the treacherous economic waves that are upon us and keep our ship steaming forward is to stick to our purpose.