settlements and the financial stability board to monitor developments in the use of interest rate benchmarks and ensure that we never have to face a problem like libor again. 7 bring it on home i will now bring it on home. we are now at the bridge to the next 10 years of the u. s. treasury market conference. although there has been significant progress, the growth and evolution of this market remind us of the importance of staying focused on this work and continuing to make progress in the years ahead. in an era of heightened uncertainty and volatility, it is essential that the u. s. treasury market remain liquid and resilient, so that all financial markets can operate effectively. if you were ever in doubt of how important this is, the experience of the past several years should convince you otherwise. thank you, and i look forward to today's conference, and to another decade of partnership and success. 3 / 4 bis - central bankers'speeches 1 u. s. department of the treasury, board of governors of the federal reserve system, federal reserve bank of new york, u. s. securities and exchange commission, and u. s. commodity futures trading commission, joint staff report : the u. s. treasury market on october 15, 2014, july 13, 2015. 2 conference summary, " the evolving structure of the u. s. treasury market, " held at the federal reserve bank of new york, october 20 - 21, 2015. 3 john c. williams, a solution to every puzzle, remarks at the 2020 u. s. treasury market conference, federal reserve bank of new york, september 29, 2020. 4 john c. williams, a jack of all trades is a master of none, remarks at the 2022 u. s. treasury market conference, federal reserve bank of new york, november 16, 2022. 5 john c. williams, elementary, dear data, remarks at the 2023 u. s. treasury market conference, federal reserve bank of new york, november 16, 2023. 6 federal reserve board, federal reserve bank of new york : alternative reference rates committee 7 financial stability board, final reflections on the libor transition, july 28, 2023. 4 / 4 bis - central bankers'speeches

the surge in mortgage originations and securitizations pushed up the earnings of the major banking and securities firms. these strong earnings created incentives to ease underwriting standards further. but, as housing supply responded to the increase in home prices — housing starts rose from a 1. 5 million annual rate in mid - 2000 to a 2. 3 million annual rate in early 2006 — the positive feedback loop began to run in reverse. home prices began to soften, subprime borrowers found it more difficult to refinance, and mortgage loan defaults and delinquencies rose. as the bust got underway in earnest, residential investment declined and consumer spending was undercut as home equity levels fell. the housing boom and bust underscores several important lessons. first, the financial sector is not only a very complex system, but also one that can be inherently unstable — subject to excess, then sharp reversal. this is especially the case when an important innovation occurs and market participants don ’ t fully appreciate the powerful feedback loops that first sustain a boom and then contribute to a bust when the process runs in reverse. this means that we as regulators must continually evaluate the financial system and monitor the landscape for new developments and innovations that, if taken too far, could lead to excess and put the system at risk. second, when there are potential excesses that could threaten financial stability, we should look to temper them. for example, in the run - up to the financial crisis, macroprudential tools — such as requiring larger down payments or more closely evaluating the incomes of borrowers — could have been implemented to limit the demand for housing. if such an approach were successful, home prices would not have risen so dramatically, and the subsequent bust would have been less severe. another approach would have required financial intermediaries to build stronger capital and liquidity buffers as protection against a housing bust and an economic downturn. prior to the financial crisis, the conventional wisdom was that asset bubbles could not be identified in real time — rather, they could only be cleaned up after they burst. while there are significant challenges to identifying asset bubbles, it is clear that cleaning up only after they burst does not always work out well in practice. third, we need to carefully monitor the incentives that govern the behavior of borrowers, savers, and financial intermediaries. during the crisis, some examples of bad incentives that sustained the boom included : 2 / 7 bis central bankers'speeches 1. compensation