for release on delivery 7 : 00 p. m. edt may 20, 2019 business debt and our dynamic financial system remarks by jerome h. powell chair board of governors of the federal reserve system at “ mapping the financial frontier : what does the next decade hold? ” 24th annual financial markets conference, sponsored by the federal reserve bank of atlanta amelia island, florida may 20, 2019 it is a pleasure to be here at this important annual event sponsored and organized by the federal reserve bank of atlanta ’ s center for financial innovation and stability. the risks in our financial system are constantly evolving. fifteen years ago, everyone was talking about whether households were borrowing too much. today everyone is talking about whether businesses are borrowing too much. this evening, i will focus on the implications of the increase in business debt over the past decade and review the steps the federal reserve and other agencies are taking to understand and limit the associated risks. in public discussion of this issue, views seem to range from “ this is a rerun of the subprime mortgage crisis ” to “ nothing to worry about here. ” at the moment, the truth is likely somewhere in the middle. to preview my conclusions, as of now, business debt does not present the kind of elevated risks to the stability of the financial system that would lead to broad harm to households and businesses should conditions deteriorate. at the same time, the level of debt certainly could stress borrowers if the economy weakens. the federal reserve continues to assess the potential amplification of such stresses on borrowers to the broader economy through possible vulnerabilities in the financial system, and i currently see such risks as moderate. discussion many commentators have observed with a sense of deja vu the buildup of risky business debt over the past few years. the acronyms have changed a bit — “ clos ” ( collateralized loan obligations ) instead of “ cdos ” ( collateralized debt obligations ), for example — but once again, we see a category of debt that is growing faster than the income of the borrowers even as lenders loosen underwriting standards. likewise, much - 2of the borrowing is financed opaquely, outside the banking system. many are asking whether these developments pose a new threat to financial stability. at the federal reserve, we take this possibility seriously. the fed and other regulators are using our supervisory tools and closely monitoring risks from the buildup of risky business debt. business debt has clearly reached a level that should give businesses

those of the technical and professional institutes – and of the criteria concerning the size of classes. the current pupil - teacher ratio ( 8. 9 ) increases only slightly if the calculations exclude backup teachers, a feature of the italian school system ; in the other oecd countries the ratio is on average 16. 7 for primary schools and 13. 4 for secondary schools. there is scope for improvement in the organization of the school system and a more flexible utilization of the workforce, which could offset the reduction in the number of teachers without affecting the quality of the service. 4. some evaluations the reintroduction in the planning document, after almost a decade, of a multi - year planning scenario for the individual items in the general government consolidated accounts greatly increases the information provided on budgetary policy ; it means that parliament and public opinion can better assess government policies on the level and composition of public revenue and expenditure. the inclusion of the detailed planning scenario in the stability pact will align the information this contains with that provided in the pacts of the other european countries. despite the difficult economic climate, the planning document confirms the objective of a balanced budget in 2011. it is a sign of italy ’ s ongoing commitment to the pledges made to its european partners. the achievement of balance, which is entrusted to an increase in the primary surplus, will guarantee a rapid reduction in the ratio of debt to gdp, a crucial objective in light of the unfavourable demographic outlook in the coming decades. in 2006 - 07 the structural budget balance improved significantly in many euro - area countries ; according to european commission estimates, the average improvement across the euro area was 1. 6 percentage points ( 2. 1 points in germany ). italy recorded a substantial improvement of 3 points, but is one of the few countries that continue to fall significantly short of budgetary balance. a significant new departure with respect to previous years is the passing, together with the planning document, of a decree law that defines what must be done to achieve the objectives set for the next three years. for many areas of expenditure, however, the decree law postpones the detailed definition of corrective measures to future legislative and administrative measures. the ratio of tax and social security contributions to gdp envisaged for 2011 is basically unchanged compared with the level expected for the current year, which is high by both historical and international standards. it is important that the progress made in curbing expenditure and the fight against tax evasion be translated as soon as possible into