##3a. pdf. bis central bankers ’ speeches reputational problems in the asset management arm could spill over to the parent company, or vice versa. new macroprudential tools, be they leverage limits, guided stress tests, or redemption gates, would need to be placed in the hands of the regulators to be effectively deployed. and just as for the banking sector, to be successful in countering the build - up of systemic risks over the cycle they would need to be applied in a time - varying fashion. however, it is important to stress that, when determining the appropriate policy responses to mitigate growing risks in the sector, consideration should be given to its growing role in credit intermediation. we need to ensure that the impact on supply of credit to the real economy is limited. there is of course much we still have to learn about the design and implementation of such instruments ; indeed, we are still only beginning to discover the mechanisms through which macroprudential policy works in the banking sector. still, i am convinced that these additional instruments are essential – and starting work on them is urgent – if we are to have a holistic view on systemic risk and financial stability. conclusion let me conclude. what i have argued today is that we are entering into an environment where monetary policy cannot be responsible for managing the financial cycle. and this fact, while acknowledged in principle, has not yet been fully reflected in our policy frameworks in practice. a comprehensive approach to macroprudential policy means two things. first, making efficient use of macroprudential tools that can constrain excessive credit growth towards the real estate sector, which is the main driver of the financial cycle. borrower - based measures therefore come to the forefront. given their importance, they deserve to be properly embedded in european legislation and effectively coordinated within european institutions. second, broadening the coverage of the macroprudential toolkit to reflect changing patterns of intermediation – i. e. to the shadow banking sector. it may be the case, as jeremy stein famously argued, that monetary policy is the best tool to “ get in all the cracks ” of the financial system. but as that option may not be available to us for some time, it is incumbent on policymakers to put more attention into developing instruments that can reach into all the corners of the financial system. i trust that our conference today will provide many useful insights on how we can proceed with this agenda. bis central bankers ’ speeches

level of skill, and the result is an apparent excess of supply relative to a declining demand. these changing balances are most evident in the failure of real wages at the lower end of our income distribution to rise during the past quarter - century. the hypothesis that we should be able to improve upon the knowledge that our students acquire as they move from kindergarten to twelfth grade gains some support from international comparisons. a study conducted in 1995 revealed that, although our fourth - grade students were above average in both math and science, by the time they reached their last year of high school they had fallen well below the international average. 1 accordingly, we apparently have quite a distance to go before we catch up. early last century, technological advance required workers with a higher level of cognitive skills - for instance the ability to read manuals, to interpret blueprints, or to understand formulas. youth were pulled from rural areas, where opportunities were limited, into more - productive occupations in business and an advancing manufacturing sector. our educational system responded : in the 1920s and 1930s, high - school enrollment in this country expanded rapidly. it became the job of these institutions to prepare students for work life. in the context of the demands of the economy at that time, the third international math and science study is a project of the international study center, lynch school of education, boston college. a complete set of timss publications is available on the center ’ s web site, http : / / timss. bc. edu / timss1995i / timsspublications. html. a high - school diploma represented the training needed to be successful in most aspects of american enterprise. the economic returns for having a high - school diploma rose and, as a result, high - school enrollment rates climbed. by the time that the united states entered world war ii, the median level of education for a seventeen - year - old was a high - school diploma - an accomplishment that set us apart from other countries. i cannot dismiss the notion that we can learn something from that period and perhaps from other countries. still, i realize that the world was different from today in many ways. societal changes have been numerous and profound, and our schools are being asked to do a great deal more than they have in the past. we need to be forward - looking in order to adapt our educational system to the evolving needs of the economy and the realities of our changing society. one area in which educational investments appear to have