mr greenspan presents the federal reserve ’ s semi - annual report on monetary policy to the us senate testimony of the chairman of the board of the us federal reserve system, mr alan greenspan, before the committee on banking, housing, and urban affairs of the us senate on 23 / 02 / 99. chairman and members of the committee, i appreciate the opportunity to present the federal reserve ’ s semiannual report on monetary policy. the u. s. economy over the past year again performed admirably. despite the challenges presented by severe economic downturns in a number of foreign countries and episodic financial turmoil abroad and at home, our real gdp grew about 4 percent for a third straight year. in 1998, 2¾ million jobs were created on net, bringing the total increase in payrolls to more than 18 million during the current economic expansion, which late last year became the longest in u. s. peacetime history. unemployment edged down further to a 4¼ percent rate, the lowest since 1970. and despite taut labor markets, inflation also fell to its lowest rate in many decades by some broad measures, although a portion of this decline owed to decreases in oil, commodity, and other import prices that are unlikely to be repeated. hourly labor compensation adjusted for inflation posted further impressive gains. real compensation gains have been supported by robust advances in labor productivity, which in turn have partly reflected heavy investment in plant and equipment, often embodying innovative technologies. can this favorable performance be sustained? in many respects the fundamental underpinnings of the recent u. s. economic performance are strong. flexible markets and the shift to surplus on the books of the federal government are facilitating the build - up in cutting - edge capital stock. that build - up in turn is spawning rapid advances in productivity that are helping to keep inflation well behaved. the new technologies and the optimism of consumers and investors are supporting asset prices and sustaining spending. but, after eight years of economic expansion, the economy appears stretched in a number of dimensions, implying considerable upside and downside risks to the economic outlook. the robust increase of production has been using up our nation ’ s spare labor resources, suggesting that recent strong growth in spending cannot continue without a pick - up in inflation unless labor productivity growth increases significantly further. equity prices are high enough to raise questions about whether shares are overvalued. the debt of the household and business sectors has mounted, as has the external debt of the country as a whole

securities, ( 3 ) establish a reliable yield curve, ( 4 ) develop a set of obligations, rights and incentives of market makers, ( 5 ) introduce an efficient repo market, and ( 6 ) strengthen regulatory oversight over the repo and fixed income market. we will follow a coordinated and deliberate sequenced approach to ensure smooth implementation of these reforms. i am happy to report that to date, we have seen progress from these initiatives. for instance, since june, the btr has been sending “ report cards ” to government securities eligible dealers ( gseds ) highlighting their performance in the primary and secondary markets. these will serve as basis for future recognition of market makers. we have seen performance of gseds improve following the release of these report cards and the unveiling of the roadmap, through improved subscriptions, higher participation in pre - auction surveys, and more gseds providing indicative bids. bid submissions show tighter convergence and presence of outliers are now more limited. from a difference between the highest and lowest bids of 190 bps, spread is now around 25bps. 4 / 5 bis central bankers'speeches soon, the btr will announce the preliminary market makers and will launch the actual enhanced gsed program early next year. by november of this year, we also look forward to the first trade in the repo market. we are also further liberalizing and rationalizing foreign exchange rules. this is consistent with efforts to enhance the ease of doing business and facilitate job - generating investments. there is also the aim of improving data capture for effective policy decision - making. the amendments of fx regulations are part of a broader thrust for an organized fx market in order to enhance transparency, improve price discovery, and make available more fx instruments, particularly hedging products. finally, we will further promote competition in the banking sector by welcoming more foreign players that can bring in international expertise in customer service, innovation, and even additional fdis. since the full liberalization of the banking sector in 2014 through republic act no. 10641, the entry of ten ( 10 ) foreign banks has been approved by the bsp. we expect – and we want – more players to come in and serve the growing financial needs of our robustly growing economy. ladies and gentlemen, the philippines has come a long way, achieving investment grade sovereign rating status, and becoming an economic outperformer even in the wake of external headwinds. in the next cycle of economic