have - consumers - long - run - inflation - expectationsbecome - un - anchored. - 10 nonparticipation is 7. 5 percent. employment is still a bit short of the mark on what i consider to be substantial further progress. but if progress continues as i hope, it may soon meet the mark. while inflation has been well above target for the past six months, affecting consumers and businesses alike, it previously spent roughly a quarter century below 2 percent. there are good reasons to expect a return to pre - covid inflation dynamics due to the underlying structural features of a relatively flat phillips curve, low equilibrium interest rates, and low underlying trend inflation. while the playbook for guiding inflation back down to target following a moderate overshoot is well tested and effective, experience suggests it is difficult to guide inflation up to target from below. once covid constraints recede, i see no reason the labor market should not be as strong or stronger than it was pre - pandemic. the forward guidance on maximum employment and average inflation sets a much higher bar for the liftoff of the policy rate than for slowing the pace of asset purchases. i would emphasize that no signal about the timing of liftoff should be taken from any decision to announce a slowing of asset purchases. we have learned this summer that it is important to remain highly attentive to the data and to avoid placing too much weight on an outlook that remains highly uncertain. in implementing policy step by step, we must remain faithful to our new framework and attentive to changing conditions in order to ensure sufficient momentum as fiscal tailwinds shift to headwinds to achieve our maximum employment and inflation goals.

the united states, the growing role of the banking sector in the economy : they all made it clear that a sound functioning of the banking system was too important to be arranged informally. in this respect it is noteworthy that supervision on the insurance sector was formalised even further back in time and exists almost 80 years now. but, of course, in the decades that have passed since then the financial environment has kept on changing, and with it the challenges that supervisors face. two trends have been particularly prominent in the past decades. the first is the enormous increase in cross - border activities made possible by the liberalisation of capital markets. the second is the blurring of the borderlines between banking, insurance and securities activities. these fundamental developments are the driving force behind the increasing need for convergence of supervisory practices across borders and sectors. let me illustrate by looking at our experiences in the netherlands. the international dimension of our major financial institutions has increased dramatically. as a result, in some cases nowadays more than half of assets and profits are related to activities in foreign countries. there are no signs that the internationalisation of the financial industry will slow down, rather on the contrary. in a world where national financial systems and institutions are increasingly dependent upon one another, it is obviously crucial for financial stability that high and comparable supervisory standards are maintained everywhere. this has long been recognised in the field of banking regulation. indeed, it was reflected in the establishment and the work of the basel committee, as well as in the work of the european committees in this field. in this context i would like to express my great respect for the leadership shown by bill mcdonough in steering the ship ‘ basel ii ’ through stormy seas to a save haven. this difficult task could not be in better hands than those of a former us navy officer! importantly, as part of basel ii, there is wide recognition that besides having convergence in regulation, it is equally important that supervisory practices ( the implementation of the rules! ) converge. the creation of the accord implementation group by the basel committee, and the work being done by the groupe de contact in europe reflect this understanding. it is important to keep in mind that the importance of cross - border convergence is not confined to the banking industry. it equally applies to other parts of the financial sector, such as insurance. this brings me to the other main trend that i mentioned, i. e., the blurring of the borderlines between banking, insurance and securities activities. here too, the