and gale. as i noted in connection with variation margins, initial margin requirements would also improve transparency because derivative market participants will know that their counterparties are at least partially insulated from defaults. of course, these benefits need to be appropriately balanced against the burdens imposed by initial margin. but it seems highly unlikely that the status quo is consistent with achieving the goals of the g - 20 to reduce the potential for systemic risk in the otc derivatives markets that could threaten the financial system. finally, let me turn to data requirements. both the research that i have highlighted today and practical experience demonstrate that market, prudential, and systemic risk authorities need detailed information on derivatives transactions and bilateral positions to assess evolving market risks and to execute their financial stability responsibilities. indeed, the federal reserve has already used preliminary information from the depository trust & clearing corporation ’ s trade information warehouse to construct network graphs of the cds market such as the one illustrated in figure 4. the data enable identification, for example, of firms, such as a and b in figure 4, that are large net sellers of protection. such information can play a valuable role in supervision. moreover, the analyses for monitoring and measuring systemic risks suggested and described by gai, haldane, and kapadia and by cont, moussa, and santos require this kind of detailed data to gain a holistic view of systemic risk. title vii of the dodd - frank act requires that data on u. s. swaps transactions be reported to swaps data repositories regulated by the commodity futures trading commission or to securities - based swaps data repositories regulated by the securities and exchange commission. similar european regulations impose trade reporting requirements on swaps transacted in europe. but there is still no guarantee, due to confidentiality concerns and legal barriers to data sharing, that the data reported into these trade repositories will ultimately be accessible to all of the regulators who require the data to obtain a holistic view of the derivatives market. given that the derivatives market is global in scope, access to those data is essential for authorities with systemic risk responsibilities, such as the federal reserve, to monitor and respond to risks. to make this point concrete, it is unclear whether we will be able, on a regular and comprehensive basis, to produce the sort of analysis illustrated by figure 4. in order to effectively monitor market developments and systemic risks, it is crucial that regulators across jurisdictions and countries share data on

last year offset the pressure from rising compensation gains on labor costs per unit of output. and non - labor costs, which are roughly a quarter of total consolidated costs of the nonfinancial corporate sector, were little changed in 1996. owing in part to this subdued behavior of unit costs, profits and rates of return on capital have risen to high levels. as a consequence, a substantial number of businesses apparently believe that, were they to raise prices to boost profits further, competitors with already ample profit margins would not follow suit ; instead, they would use the occasion to capture a greater market share. this interplay is doubtless a significant factor in the evident loss of pricing power in american business. intensifying global competition may also be limiting the ability of domestic firms to hike prices as well as wages. competitive pressures here and abroad should continue to act as a restraint on inflation in the months ahead. in addition, crude oil prices have largely retraced last year ’ s run - up, and, with the worldwide supply of oil having moved up relative to demand, futures markets project stable prices over the near term. food prices should also rise less rapidly than they did in 1996 as some of last year ’ s supply limitations ease. nonetheless, the trends in the core cpi and in broader price measures are likely to come under pressure from a continued tight labor market, whose influence on costs will be augmented by the scheduled increase in the minimum wage later in the year. and, with considerable health - care savings already having been realized, larger increases in fringe benefits could put upward pressure on overall compensation. moreover, although non - oil import prices should remain subdued in 1997 as the sharp rise in the dollar over the past year - and - a - half continues to feed through to domestic prices, their damping effects on u. s. inflation probably will not be as great as in 1996. the lagged effects of the increase in the exchange value of the dollar will also likely restrain real u. s. net exports this year. in addition, declines in real federal government purchases should exert a modest degree of restraint on overall demand, and residential construction will probably not repeat the gains of 1996. on the other hand, financial conditions overall remain supportive to the real economy, and creditworthy borrowers are finding funding to be readily available from intermediaries and in the securities markets. moreover, we do not see evidence of widespread imbalances either in business inventories or in stocks of capital equipment and consumer