any enduring effect on the level of employment. so what can deliver higher levels of employment on an enduring basis? the answer lies not with central banks but with choices made by governments and societies more generally. it was the soon - to - retire secretary of the australian treasury, mr ted evans, who had the courage to say in 1993 when australian unemployment was 11 per cent of the work - force that unemployment at that level was " a matter of choice " - choices made by governments and societies. he went on to say that " if we are today looking for innovative solutions for reducing unemployment that is partly because, over the last two decades, we have found innovative ways of creating unemployment ; more basically, it is because we choose now to accept the constraints imposed by the many economic and social policy choices made during those decades. " and by saying that the unemployment level was a matter of choice, he was not suggesting that it was a choice for the central bank, but rather a choice of central government and society more generally. he went on to note that " there are now very few economists... who would deny a relationship between labour costs and unemployment - indeed, doing so would require abandoning some of the most basic tenets of our economic training. that said, there are very few, any more, who would see a reduction in nominal wages as the preferred solution to an unemployment problem... such solutions are not preferred in the formalized labour market but we should be quite clear that that reflects a choice. " in other words, he was suggesting, i believe correctly, that in the long - term unemployment is to a substantial extent a function of the relationship between the costs and risks associated with hiring people on the one hand, and the benefits, in terms of increased output, on the other. so job creation and employment levels are ultimately a function of things like labour market legislation, the level of the unemployment benefit, and the education system. and all of these things are matters quite unrelated to monetary policy. rather, they have a great deal to do with government policy and the attitudes of the public, both as providers of jobs and as potential employees. more fundamentally, i suspect that trend growth in output and employment are both a function of culture and social attitudes. how much do we as a society value consumption today as compared to consumption tomorrow? how much do we value education? how much do we value being independent as compared to being dependent on the state? how highly do we regard private property rights

ratio loan to value restrictions liquidity standards collateral standards / rmos lolr foreign exchange intervention infrastructure fmi rules and powers monitoring financial stability report stress testing supervision & engagement thematic reviews enforcement investigations directions monetary ocr policy crisis obr management statutory management ref # 7821869 v2. 0 time event varying figure 2 : the cost of recent bank failures on society fiscal cost as % of banking system assets uruguay korea greece finland czech japan iceland ireland netherlands slovenia sweden uk norway usa belgium austria spain denmark germany france luxembourg italy portugal source : imf ( 2013 ) systemic banking crisis database 0. 0 5. 0 10. 0 15. 0 20. 0 % of banking system assets figure 3 : the capital - output ‘ sweet spot ’ ref # 7821869 v2. 0 25. 0 30. 0 35. 0