example, ajello, laubach, lopez - salido, and nakata ( 2018 ) ; guorio, sim, and kashyap ( 2018 ) ; and adrian and liang ( 2018 ). 6 ccyb also builds financial - sector resilience during periods when financial vulnerabilities are high and there is a risk of potential losses within the banking sector that could strain the supply of credit. furthermore, the ccyb might be a more effective tool than monetary policy to mitigate financial vulnerabilities, as the benefits are comparable to those of using monetary policy while the costs are an order of magnitude smaller. 4 / 4 bis central bankers'speeches

that tools were available to choke off the stock market boom, but those tools would only have been effective if they undermined market participants'confidence in future stability. market participants, however, read the resilience of the economy and stock prices in the face of monetary tightening as an indication of undiscounted market strength. by the late 1990s, it appeared to us that very aggressive action would have been required to counteract the euphoria that developed in the wake of extraordinary gains in productivity growth spawned by technological change. in short, we would have needed to risk precipitating a significant recession, with unknown consequences. the alternative was to wait for the eventual exhaustion of the forces of boom. we concluded that the latter course was by far the safer. whether that judgment continues to hold up through time has yet to be determined. * * * flexibility is most readily achieved by fostering an environment of maximum competition. a key element in creating this environment is flexible labor markets. many working people equate labor market flexibility with job insecurity. despite that perception, flexible labor policies appear to promote job creation. an increased capacity of management to discharge workers without excessive cost, for example, apparently increases companies'willingness to hire without fear of unremediable mistakes. the net effect, to the surprise of most, has been what appears to be a decline in the structural unemployment rate in the united states. protectionism in all its guises, both domestic and international, does not contribute to the welfare of american workers. at best, it is a short - term fix at a cost of lower standards of living for the nation as a whole. we need increased education and training for those displaced by creative destruction, not a stifling of competition. moving forward, i trust that we have learned durable lessons about the benefits of fostering and preserving a flexible economy. that flexibility has been the product of the economic dynamism of our workers and firms that was unleashed, in part, by the efforts of policymakers to remove rigidities and promote competition. although the business cycle has not disappeared, flexibility has made the economy more resilient to shocks and more stable overall during the past couple of decades. to be sure, that stability has created some new challenges for policymakers. but more fundamentally, an environment of greater economic stability has been key to the impressive growth in the standards of living and economic welfare so evident in the united states. 4 / 5 5 / 5