jerome h powell : roundtable on “ treasury markets and debt management : evolution of treasury market and its implications ” – opening remarks opening remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at the 2015 roundtable on “ treasury markets and debt management : evolution of treasury market and its implications ”, new york city, 20 november 2015. * * * it ’ s been a month since the new york fed hosted a very successful conference on treasury market structure, and i ’ m eager to continue the conversation started there. i thought i ’ d start by discussing some of the main points i took from the conference. there were certainly different points of view on a variety of issues between broker dealers, proprietary trading firms ( ptfs ), end users and others, but hearing a range of views was exactly the dynamic we were hoping for. there was broad understanding that electronic and automated trading are here to stay. indeed, a wide range of firms are engaged in these trading practices today. participants on the ptf panel viewed their relative speed and efficiency as allowing them to provide tighter spreads and greater liquidity. one expressed the belief that his firm needed to be faster and more sophisticated because, unlike broker - dealers, they have no direct view of customer order flows. for their part, dealers noted that they provide a key service in helping their customers execute larger trades, and defended their internal matching of customer trades as a natural search for trading efficiencies. there were differing views on the significance of what happened in treasury markets on october 15, 2014. many attendees voiced concern, but a number also expressed the view that the market worked as it was supposed to, and even that nothing extraordinary occurred that day. although buy - side participants tended to believe that they were not directly affected given the short duration of the price swings that day, some noted that more frequent episodes of high volatility could lead them to demand larger risk premiums. for my part, i do realize that a single 12 - minute roundtrip episode may not mean that much in the end. but it isn ’ t satisfying to me to say that the market worked as it was intended to. the events of october 15 were unusual both in the size and speed of the moves and in the absence of a fundamental driver. the real question is whether there are dynamics at play here that are likely to produce more episodes of sudden, outsized volatility without any obvious cause. further episodes of this nature could

in a concerted push to improve productivity. it is not easy to measure productivity for the economy as a whole. however, notwithstanding the measurement problems, various estimates for the caribbean economies show gains in productivity in the 1980s, followed by a sharp decline ( in productivity ) in the 1990s. one apparent reason for the decline in the 1990 ’ s is the lower productivity of both public and private investments ( which, in the smaller economies, have been concentrated in the declining agriculture sector, or in tourism, a sector which is now in a mature phase and likely to produce smaller productivity gains ). a second factor that could have led to declining productivity is migration. the economics of migration is a complicated phenomenon. at one stage of our history, we saw migration as a safety valve against possible social explosion arising from high unemployment. migration has also benefitted our economies to the extent that remittances have become a major contributor to foreign exchange receipts in the region. in contrast to these positives, however, the evidence suggests that caribbean migration has represented a brain drain which has weakened the skills base and capacity of regional economies. the excessive emigration of skilled labor not only creates immediate gaps in the labour force, which affects productivity, but also means that resources invested in education and training do not benefit the region as intended. the third challenge that, in my view, regional economies will need to address in the quest for self - sustaining growth and development is the need to deal with chronic fiscal imbalances. for many countries in the region, these imbalances, which have largely resulted from excessive government spending, have led to a build - up in public debt to unsustainable levels. according to imf data, seven ( 7 ) caribbean countries are among the ten ( 10 ) most indebted countries in the world. in general, public debt to gdp ratios of 50 to 60 percent of gdp are considered high. however, six caribbean countries ( st kitts and nevis, jamaica, dominica, antigua and barbuda, grenada, belize and guyana ) have debt ratios between 95 and 160 percent of gdp. guyana is one of the world ’ s highly indebted countries, identified by the multilateral institutions for special treatment under the hipc programme. in the last two years, two of the regional countries – dominica and grenada have needed external debt restructuring. a third, belize – is in the process of debt restructuring. high public debt hurts growth as resources that should be devoted to productive