condones or promotes misconduct. people see something, but do not say something. and, it is so shortsighted. it prevents problems from being addressed while they are small. by not raising their hands, these colleagues are “ quietly adding risk to your books [ and ] invisibly enlarging your liabilities. ” 8 they are also tacitly encouraging bad conduct by skewing incentives. there may be many reasons for choosing silence over raising your hand. you may face a conflict of loyalties. it ’ s uncomfortable to tell on a colleague. you may think that the problem will just go away, or that calling attention to a problem will harm the firm. raising your hand is difficult. but, it is also absolutely necessary. as rising leaders in the industry, you need to lead by 4 / 6 bis central bankers'speeches example. in doing so, you will make it easier for others to follow your lead. my final message is a request that each of you commit to a candid assessment of yourselves, your firms and your industry. for adam smith, candid observation was a cornerstone of economic behavior : “ we suppose ourselves the spectators of our own behavior, and endeavor to imagine what effect it would, in this light, produce upon us. this is the only looking glass by which we can, in some measure, with the eyes of other people, scrutinize the propriety of our own conduct. ” 9 candid self - assessment is essential to knowing where you stand and how you are progressing toward your goal. industry groups here and in other financial centers are working on useful ways to measure culture — consistent with the maxim, “ if it ’ s important, you will measure it. ” but, assessment cannot stop there, and it cannot be the job of someone else — such as management, compliance, audit or a regulator. each of us must also be reflective about our own faults. we must also commit to do better going forward. when it comes to making a candid assessment of your group, your firm and your industry, i would like to suggest that you devote significant attention to incentives. i believe that incentives shape behavior, and behavior drives culture. if you want a culture that will support your long - term business strategy, you need to align incentives with the behaviors that will sustain your business over the long haul. there are many ways of encouraging certain behavior through incentives. promotion is quite powerful, as is compensation. they are powerful, in

strategies and become more homogenous over time. interest rates a second dominant theme over the post - crisis period has been unconventional monetary policy, both in the u. s. and around the world, which has direct implications for the profitability and returns of u. s. commercial banks. the low rate environment experienced through 2015, for example, constrained bank earnings, particularly net interest income earned through traditional banking activities over this period. more recently, current and expected future returns on equity for large banks have improved, in part reflecting higher interest rates and net interest margins, as well as other factors such as lower tax rates and expectations for a stronger economy. despite recent improvements, earnings pressures over most of the post - crisis period have pushed banks to reassess business strategies. for example, some banks attempted to enhance returns by building capacity and reach in new businesses ; some looked to benefit from scale and scope activities by leveraging existing infrastructure, technology, and processes to offer a broader set of services at lower cost ; some looked to reduce risk through greater diversification, and others pulled back from activities outside of their core focus. it is unclear what the net impact will be, but if all firms pursue the same strategies in search of higher risk - adjusted returns, greater similarity could result. this pressure is potentially stronger now than in the past due to the highly competitive nature of banking and this is an area for further study. technology a third theme is the emergence of “ fintech ”, which i think of as the intersection between technological innovation and the provision of financial services. while innovation has always been a competitive driver in banking, there is a sense that both the pace of change and the potential impact have become more pronounced. as prices for technology services and capacity continue to fall and technological opportunities expand, more firms are able to adopt and leverage the latest technological breakthrough. scale is likely to remain a relevant factor in the deployment of the latest technology, but, at least among the largest firms, the playing field may be leveling as firms have the opportunity to benefit from direct investments, consultants, and third - party vendors offering the latest services. if the largest financial firms are responding to the same technological forces and pursuing the same opportunities, one might expect their resultant strategic choices to contribute to greater similarity over time. 8 again, this is an empirical question that deserves further inquiry. next steps an important next step is to look at the data to assess whether recent industry trends are consistent with the premise that large banks are becoming