very few arrangements for supervision and crisis management designed for managing externalities with cross - border impact. given that the financial markets get more and more integrated the lack of adequate cross - border regulatory structures creates a number of challenges. challenges one challenge is that the interdependence between different countries increases. problems in the banking system in one country are more likely to spill over to the other countries where the bank or group is active. the cross - border contagion effects are likely to be larger as banks are actively involved in several countries. this can be illustrated by one of the largest banks in my country, nordea. it has substantial activities in four of the nordic countries, and is also a significant part of the financial system in all these countries. any serious problem in nordea will therefore most likely affect all four countries. another challenge is that decisions and actions by national authorities are likely to have considerable implications for the financial stability in foreign economies. this is of course particularly true in cases where foreign operations are run through branches, meaning that they are subject to foreign supervision. however, in europe at least, the consolidating supervisor has an increased influence also on foreign subsidiaries, within the new capital regulation – the basel ii - framework. in the nordea case – which is now a group with a subsidiary structure – the swedish consolidating supervisor has a possibility to influence the risk management of the group as a whole but also in the different subsidiaries. now, nordea has announced plans to convert its subsidiaries in the nordic countries into branches. when, and if, this plan eventually becomes a reality, swedish authorities will have the full responsibility for supervising three foreign branches, all of which may be of systemic importance in the different host countries. a third challenge is that the legal distinction between branches and subsidiaries is becoming blurred. increasingly banking groups are starting to organize themselves along business lines rather than along legal and national lines, concentrating various functions to different centres of competence. there are several examples of this trend. again nordea is one illustrative example. in order to reap the benefits from economies of scale and scope, nordea has chosen to concentrate its different functions, such as treasury operations, credit decision - making and risk management to specific centres of competence within the group. it is therefore questionable whether the different entities within the group really are selfcontained, even if they are legally independent subsidiaries. with this structure, it is also less likely that the group as whole can survive a failure

vast array of information we have at our disposal. of course, that includes the standard econometric toolkit. but we have also been increasingly relying on text analytics and machine learning. 1 / 3 bis - central bankers'speeches as a result, this conference is highly relevant for us at the federal reserve, and likely those at other central banks as well. more timely and accurate information and improved methodological techniques permit federal reserve staff to produce better estimates of the evolving economic outlook, which allows policymakers to make moreinformed decisions. it is reassuring to know that the use of these nontraditional data and techniques for academic research and for policy is no longer in its infancy. the breadth and depth of studies captured in the agenda display the material inroads of these data and methods into economic research. i am pleased to see colleagues and important contributors to this field on the conference program. jed kolko, julapa jagtiani, arthur turrell, and hal varian will discuss issues related to the opportunities and challenges for government and privatesector institutions in response to nontraditional data, machine learning, and artificial intelligence. similarly, an academic panel with jesus fernandez - villaverde, sydney ludvigson, stephen hansen, and chiara farronato will discuss how these data and methods have helped push the research frontier in subjects ranging from macroeconomic modeling to online markets. as i noted in recent remarks, there has been a surge in excitement and trepidation about generative ai. 3 the range of social effects from this new technology could be broad. jack clark, one of the co - founders of anthropic, will soon offer a keynote, and i am sure we are all looking forward to hearing his insights on the practical applications of this new ai technology and the potential use cases for economic research and policymaking. i am especially interested in seeing progress on " explainable ai, " which can bridge the divide between the technical sphere and users. i am looking forward to any discussions on this area. these generative ai tools could also have implications closer to home, as they may influence how we conduct central bank communications. there is a growing literature that uses natural language processing techniques to discern how communications by central bankers are perceived by the news media, and, in turn, how that influences financial markets. the presentations by christopher neely, clara vega, xin zhang, and xu zhang will discuss the state of the art on this subject, which