available data at face value, households appear instead to have set aside a greater share of their income for financial investment. perhaps americans are finally becoming conscious of the need to accumulate additional assets to ensure not only that they can handle temporary interruptions in employment but also that they will have the wherewithal to enjoy a lengthy retirement down the road. be that as it may, the increased flow of private savings - - and a reduced call upon those savings by the treasury - - helped to fund substantial increases in fixed investment last year. homebuilding activity was up considerably ; notably, single - family housing starts were robust once again and helped to push the nation ’ s homeownership rate to a fifteen - year high. in addition, business fixed investment posted another strong advance. firms acquired large amounts of computing and telecommunications equipment in particular, seeking to enhance the efficiency of their operations as well as their overall productive capacity. at the same time, they accumulated inventories rather cautiously : stock - to - sales ratios, which had risen in 1995, were in many cases near historic lows as of november 1996, the most recent month for which statistical information is available. the growing economy had beneficial effects on the finances of many states and localities, which consequently could spend more on needed infrastructure and vital services and, in some instances, trim taxes. of course, overall government sector purchases were held down by the ongoing efforts to reduce the federal deficit. it clearly was private demand that drove economic growth last year. to be more specific, it was domestic private demand that did so, for net exports fell, on balance, in 1996. the volume of goods and services we sold abroad grew appreciably, despite moderate economic expansion by our major trading partners, but our imports continued to grow at a rapid clip. in fact, imports provided a safety valve in a u. s. economy marked by a high degree of resource utilization. i ’ ve already noted that our unemployment rate reached the lowest level in some time. moreover, throughout the year, we heard reports from around the country that qualified workers were in tight supply. although increases in hourly compensation remained relatively subdued - - an important fact to which i shall return in a few moments - - they did become more sizable, and they raised unit costs when employers were unable to enhance productivity commensurately. thanks to the very substantial additions to facilities in the past few years, physical capacity in the manufacturing sector was not greatly strained. the question is, of course,

macroprudential modesty introductory remarks by klaas knot, at the 82nd plenary meeting of the group of thirty federal reserve bank of new york, 6 december 2019 at the g30 meeting, hosted by the federal reserve bank of new york, a panel session was held on ‘ the future of macroeconomic policies ’. klaas knot was one of the panelists. in his opening statement he discussed the role of macroprudential policies in addressing financial vulnerabilities. he stressed the need to be realistic in our expectations on what macroprudential policies can deliver under the current circumstances. the macroprudential toolkit, mr. knot said, is limited in scope and impact to mitigate systemic risks. he stressed that financial stability has to be a relevant factor to take into account in the overall macroeconomic policy mix. introduction what a difference a year can make. in december 2018, the ecb decided to end its net purchases under the asset purchase program and it was believed that 2019 would focus on steps towards monetary policy normalization. now, one year later, rates have been cut both in the us and in europe and net asset purchases have restarted in europe. the main theme in international discussions at the fsb and imf is the prolonged nature of low interest rates. these discussions focus on the structural level of the natural interest rate and are reflected in terms as ‘ low - for - long ’ or even ‘ low forever ’. the weakening of the economic outlook and shift in financial conditions have increased stability risks in the global financial system. i will argue today that we need to be realistic in our expectations on what macroprudential policies can deliver under the current circumstances to safeguard financial stability. the macroprudential toolkit is limited in scope and impact to mitigate systemic risks. following this observation, it also raises important ( and sometimes new ) questions on the implications for the overall macroeconomic policy mix. i. vulnerabilities in the financial system in order to discuss the role of macroprudential policies in current economic circumstances, let ’ s first take a look at the main pockets of vulnerabilities featuring prominently in the fsb ’ s semi - annual exercises. as my goal is to map macroprudential policies onto these vulnerabilities, i will abstain from geopolitical risks such as trade disputes and brexit. credit growth / leverage first of all, the low - interest rate environment leads to a