NEW YORK — A key lesson from the global financial crisis is that new, complex financial products must be treated with much caution, a top official of the Federal Reserve Bank of New York said Monday.

That is an old lesson, which investors should have already learned from what occurred in the run-up to previous episodes of financial crisis, said Simon Potter, an executive vice president at the New York Fed and the bank's director of economic research.

However, "the remarkable stability of the U.S. economy from the mid-1980s to 2007 unfortunately served to produce what amounted to a collective amnesia with regard to these earlier learned lessons," Potter said. It is important that that does not happen again, he said.

Potter was delivering prepared remarks at a breakfast for the Connecticut Bank and Trust Company in Hartford, Conn.

In his remarks, he acknowledged that in the run-up to the financial crisis and its initial stages, short-term tactical missteps and long-term strategic miscalculations were made by both the private and public sectors. Many miscalculations were related to allowing significant gaps in the regulatory framework to persist, Potter said, a problem financial reform proposals currently being considered by Congress are attempting to address.

Potter outlined four distinct phases of the recent crisis in his comments and delved into lessons to take away from the downturn.

He said that one consistent theme that emerges is that central banks must have the ability to respond quickly and flexibly in a crisis situation.

"This ability is crucial in preventing the emergence of an adverse feedback loop between instability in the financial system and weakness in the real economy," Potter said.

He also stressed the importance of ensuring that accountability and transparency keep pace with the actions being taken in the event of a crisis situation.

"The need for accountability and transparency is especially true when central bank actions are being used to innovatively fill holes in a regulatory and legal framework that has not kept pace with the evolution of the financial system," Potter said.

Another key lesson from the worst downturn since the Great Depression: the need for formal coordination among the diverse authorities in the U.S. in establishing and maintaining financial stability, Potter said.

On policy making, Potter said that whether it is fiscal, monetary, supervisory or other, it "must always strive to be as forward-looking as possible, and to be robust to the possibility that we will experience situations tomorrow that are unimaginable today."

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