to raise awareness around the use of pronouns. on its own, it may seem like a small change, but it sends a loud message that part of respecting one another is using the correct pronouns. this effort has been well received, and a big part of that is because it ’ s created spaces for conversations that just weren ’ t happening before. but policies can only go so far. in fact, we can have world - class policies, but if we don ’ t have a culture where people feel comfortable bringing their whole selves to work, rules alone won ’ t get us to where we need to be. this is true of every element of diversity and inclusion. in a culture where taking extended leave damages your career prospects, a generous parental leave policy won ’ t make up for that. in a culture where people don ’ t feel that their voices are welcome, few will speak up. in a culture that fails to embrace differences, we won ’ t reap the benefits of diversity. 1 / 3 bis central bankers'speeches the data are clear. nearly half of lgbt people are closeted at work, and the top reason lgbt workers don ’ t report negative comments they hear about lgbt employees is they don ’ t believe that anything will be done about it. 3 this gets to the heart of why the “ inclusion ” piece of diversity and inclusion is essential, and a personal priority. obviously, there ’ s a moral imperative for diversity, and numerous studies have shown the benefits to both productivity and the bottom line. 4 but for me, it ’ s my experiences as both an academic and a policymaker that have made inclusion so important. economics is a profession that has a glaring diversity issue. as economists, we have not done enough to create a diverse profession or an inclusive culture. when i ’ m sitting in a room and see a bunch of people who look and sound the same, i know it ’ s a problem. when everyone has an identical view, it ’ s easy to assume it ’ s because that view is the right one. but for me it raises questions : who isn ’ t in the room? who ’ s missing, and why aren ’ t they here? i ’ m always on the hunt for different perspectives on how to interpret the data, new takes on old problems, and innovative approaches to tackle the challenges that lie ahead. if i have a bunch of cookie - cutter theories and explanations that look like my own, i know it ’ s highly probable we

bust in several ways. first, the collateral calls generated by sharp movements in the mark - to - market value of the otc derivative trades drained liquidity buffers and provoked the fire sales of assets. these fire sales increased volatility and provoked still greater margin calls. this dynamic was one reason why the market prices of these assets overshot to the downside – that is they fell more than needed simply to reflect the increase in expected credit losses. in other words, the illiquidity risk premiums embedded into the prices of these assets became very large. second, the bilateral nature of the otc derivatives market – between the two parties to the contract – be it dealer and customer or dealer and dealer – created its own set of difficulties. when counterparties became concerned about the health of a particular dealer, they often moved their trades – via novation – to other dealers. they did this to protect themselves should the dealer subsequently fail. but this process was difficult to carry out quickly and in size. the cumbersome nature of the process disturbed market liquidity and function. it also tended to drain off the liquidity from the troubled dealers because these dealers often used the counterparty cash collateral to fund their own operations. when customers moved their bis central bankers ’ speeches business, the collateral balances departed with them and this worsened the funding crunch on the troubled dealers. third, when a large counterparty, lehman brothers, filed for bankruptcy, it could no longer meet its obligations. the claims of lehman ’ s customers, including those open otc derivatives positions in which lehman owed them money, were frozen. the lack of adequate segregation of the customers ’ assets from the lehman estate and the inability to move the outstanding obligations to other dealers – which we refer to as the lack of portability – created large problems for lehman ’ s counterparties. often lehman ’ s clients were in the position that one side of a trade executed with lehman was frozen, but the offsetting side remained open and exposed to volatile financial markets. this asymmetry contributed to the sharp increase in market volatility, the dramatic reduction in market liquidity, and the impairment in market function following the lehman failure. fear that this could happen again if another firm failed, encouraged flight from other dealers perceived by market participants to be relatively weak that might have large potential exposures. of course, as if this were not bad enough, the opaqueness of the otc derivatives market made the situation much worse. no one