A now-extinct Washington bank used to proclaim itself “the most important bank in the most important city in the world.”

That title really belongs to the Federal Reserve System, also with headquarters in our nation’s capital. What the independent Fed does has not just national but world-wide repercussions.

And though the Senate has not yet confirmed Janet Yellen, President Barack Obama’s nominee to become chairman of the Board of Governors of the Federal Reserve System, what she says already has major ripple effects, too.

Though some of the lawmakers who questioned her in her first confirmation hearing Thursday expressed justified concerns about Fed policy, her approval is virtually assured.

Ms. Yellen, who will be the first woman to head the Fed, has an impressive resume, having been vice chairman of the Fed for three years under the man she will replace, Ben Bernanke.

She also has served as president of the Federal Reserve Bank of San Francisco and chair of President Bill Clinton’s Council of Economic Advisers.

A survey by The Wall Street Journal last summer found her to be the most accurate forecaster of economic trends among the Fed’s top policy makers.

She knows all too well the numbers that describe the state of the U.S. economy.

And on Thursday, she said she didn’t much like what she saw in those figures. Despite improvements in such sectors as the housing market and automobile sales, and some limited progress on jobs, she correctly pointed to last month’s 7.3 percent unemployment rate as “still too high, reflecting a labor market and economy performing far short of their potential.”

That means, she said, that the Fed will continue the extraordinary stimulus measure introduced by Mr. Bernanke in 2008 known as “quantitative easing,” under which the Fed has pumped nearly $4 trillion into the economy by buying mortgage bonds and treasury bonds with new money.

Last year Mr. Bernanke announced that the Fed would continue adding $85 billion a month to the economy through such purchases until either unemployment falls below 6.5 percent, or until core inflation rises above 2.5 percent. Ms. Yellen noted Thursday that inflation continues to be below 2 percent.

But quantitative easing raises two troubling issues. Critics rightly warn that it has mainly fattened the balance sheets and profits of the nation’s big banks, which have become even bigger in the wake of the financial crisis they helped to create, while having only a modestly positive effect on main-street businesses.

Second, as Ms. Yellen said Thursday, “This program cannot continue forever.”

That’s because quantitative easing carries Fed balance-sheet dangers that could become serious enough to demand a multi-trillion dollar bailout by the U.S. Treasury if not managed carefully.

“QE” also threatens to fuel inflation, which history shows can explode surprisingly quickly when government policy devalues a national currency.

The hard challenge for Ms. Yellen as the new Fed head will be how to end quantitative easing before it does much more harm than good.

And as our nation’s central bank keeps, in effect, printing an extra $1 trillion a year that we don’t really have, it puts the dollar at rising risk.