New York Federal Reserve President William Dudley told guests at the Andrew Crocket Memorial Lecture in Switzerland that monetary policy was a difficult thing to achieve while most of the world remained deep in financial instability.

“In my mind, the biggest lesson of the financial crisis has been that monetary policy cannot work properly when there is financial instability. When financial instability occurs, it disturbs market functioning and can also impair bank balance sheets,” Dudley said.

He also told attendees that the existing financial systems need to be robust enough to absorb shocks and that the central bank had to ensure that financial market bubbles didn’t develop in the first place.

Dudley voted in favor of the new policy, which calls for the central bank to cease buying bonds when unemployment falls to 7 percent.

He said the U.S. has fallen short of its employment and inflation objectives. “This suggests that with the benefit of hindsight, U.S. monetary policy, though aggressive by historic standards, was not sufficiently accommodative relative to the state of the economy,” Dudley said.

Dudley was the second member of the Fed to speak since Chairman of the Federal Reserve Ben Bernanke held a press conference last week.