still, individual banks in each country, not just the u. s., must face the proper incentives to keep up with an ever changing technology. lax supervisory practices - or, worse, government support of banks with poor risk practices - do not provide proper incentives. thus, each supervisory authority in each developed nation must be vigilant that the disparities between the world ’ s best practice institutions and those large banks inside the best practices frontier do not grow wider. indeed, i believe that an important function of supervisors is to act as something of a clearinghouse for best practices. internationally, supervisors from the major industrialized nations have been performing this function more and more through their joint efforts. in the united states, the clearinghouse function is an important component of the on - site examination. conclusion in conclusion, i hope that my remarks have helped you to better understand the forces affecting our banking and financial system. equally important, i hope that i have given you a good feel for the challenges these forces have created for bank supervision, how we are meeting these challenges today, how we may deal with them in the future, and the role of the federal reserve in these complex, dynamic, and exciting issues. all of us have a very big stake in the continued health, stability, and competitiveness of our banking system. i encourage each of you to think deeply about what is required to achieve these goals. [UNK] [UNK]

and would signal a strengthening of the recovery that will ultimately be good for business. in the aggregate, the main measures of hourly compensation rose at a rate of only around 2 percent through most of the recovery. and in rhode island, average hourly earnings have not risen at all in the past year. nationally, there are at least some encouraging signs of a pickup so far this year. 2 the fact that some large companies, such as wal - mart and target, have announced wage increases for their employees also might be a sign that larger wage gains are on the horizon. this improvement in the labor market has brought the economy closer to one of the two goals of monetary policy assigned to the fed by the congress – maximum employment. less progress has been made toward the other goal, price stability. consumer price inflation remains below the fed ’ s stated objective of 2 percent. the notion that inflation can be too low may sound odd, but over time low inflation means that wages as well as prices will rise by less, and very low inflation can impair the functioning of the economy – for example, by making it more difficult for households and firms to pay off their debts. overall consumer price inflation has been especially low – close to zero – over the past year, as the big fall in oil prices since last summer lowered prices for gasoline, heating oil, and other energy products. but inflation excluding food and energy, which is often a better indicator of where overall inflation will be in the future, has also been low, below the fed ’ s 2 percent objective both now and for almost all of the economic recovery. inflation has been held down by the continued economic weakness during the slow recovery and, more recently, by lower prices of imported goods as well as the fall in oil prices. with oil prices no longer declining, and with the public ’ s expectations of future inflation apparently stable, my colleagues on the federal open market committee ( fomc ) and i believe that consumer price inflation will move up to 2 percent as the economy strengthens further and as other temporary factors weighing on inflation recede. a number of economic headwinds have slowed the recovery, and to some extent they continue to influence the outlook. these headwinds include, first, the fact that the housing crash left many households with less wealth and higher debt, weighing on consumer spending. many homeowners lost their homes, and many more ended up “ underwater, ” owing more on their mortgages than their homes were worth. economists have