financial modernization law will likely bring an increase in mergers among firms that had been specializing in different financial services. these mergers will be undertaken to take advantage of the perceived synergies and cost advantages imagined from such combinations. if synergies in back office operations or in delivery of service can be captured, such linkages might well provide a more efficient, and hence less costly, delivery of complementary services. the extent of consolidation and broadening remains in question, however, which gives rise to the second opportunity : the opportunity to deepen specialization. in a world of large, full - service providers, i think there will be demand for specialty providers. these niche players presumably will be smaller and potentially more competitively agile than the larger competitors. the ability to foresee the creation of important specialty competitors requires no more than an ability to generalize from other industries, such as retailing, in which consolidation has existed side by side with the emergence of successful specialty businesses. another opportunity open to the financial sector is the continuation of the impressive trend toward globalization and international consolidation. major overseas markets are becoming more open, although the degree of openness varies from market to market. “ big bangs ” have occurred in major markets, and privatization is the norm in a number of others. of course, wisely or not, some still demand “ national champions ”, and others worry about privatizing the “ crown jewels ”. importantly, the sophistication, scale, and scope that firms are building domestically, both here and in europe, translates easily into a global platform. examples abound : not only the success of us securities firms in european and asian markets but also european banks in the united states. also, the emergence of the euro as a successful global currency, with the payments infrastructure, unified monetary policy, and converging fiscal policies that are associated with it, creates an attractive, large market. this is a market that us firms have found, and will continue to find, hospitable and in which european cross - border mergers will, no doubt, continue. and, of course, the deepening of technology capabilities in most financial institutions means that management on a global scale, particularly risk management, is now feasible as well as necessary. this dynamic presents many challenges. the most obvious is in achieving the benefits and promise of consolidation and broadening. as we have seen, mergers between banks do not all achieve the full promise originally envisioned. in some cases, post - merger integration skills are

households have increased their debt faster than their disposable personal income in every quarter over the past five years. despite increased borrowing, however, the household debt service burden, as conventionally measured to include consumer and mortgage debt, remains below the levels reached in the 1980s. this burden has been held down in recent years by falling interest rates and a shift toward longer maturity mortgage debt. nonetheless, even in good economic times it is prudent for households to be prepared for a range of outcomes, not just the most optimistic ones. caution in the global economy while being cautious, let me not convey a pessimistic tone, because i believe that the four major forces currently driving the domestic economy could well provide the underpinning for a new era of prosperity in the global economy. the first of these forces is the creation of, and massive investment in, technology - particularly information and communication technologies. technology is thought to have played an important role in the increase in productivity - the output of goods and services per hour of labor - that is currently providing momentum for the economy of the united states. the second major force is business deregulation. the removal of unnecessary government regulation started more than twenty years ago during the administration of president gerald ford but gathered momentum during the carter years. deregulation allowed businesses, indeed forced businesses, to focus more clearly on the competitive market place, with lessened constraints and increased flexibility. the third major force is more prudent fiscal policy. the latter part of the 1990s has been characterized by government surplus, which, many believe, has freed investment resources for private - sector investment. the final major change was the reduction of both actual inflation and the expectation of inflation as a necessary component of personal and business decision - making. this trend began during the early - 1980s, and it has reached the point of fruition only in the past few years. relatively stable prices have allowed businesses and households to plan their economic affairs with a general expectation that the value of investments will not be eroded through a pernicious increase in the general price level. indeed, price level stability has reinforced the impetus provided by deregulation for businesses to manage their affairs with a priority on efficiency. these developments are not unique to the united states. while our nation was the first to achieve the full benefits of these forces, they have been at work globally as well. software and capital goods embodying newer information and communications technology are a major export of the united states. other nations have