month an advance notice of proposed rulemaking for a simplified capital framework that would apply to banks with less complex risk structures. the notice sets forth very broad options for a less burdensome standard, including the use of a simplified risk - based ratio, a stand - alone leverage ratio, or a leverage ratio modified to capture off - balance - sheet exposures. there are many pros and cons to each of these alternatives, and the banking agencies are eager to receive your views as well as your ideas for other alternatives. we are hopeful that this dialog will lead to a less burdensome, yet prudent rule for noncomplex institutions. in closing, the transition of the us economy to a more sustainable supply - demand relationship is posing challenges for businesses, banks, and monetary policymakers. how well banks perform under these conditions will depend on their ability to continuously reevaluate previously held assumptions and adapt to change. fortunately, us banking organizations of all sizes have the right tools to thrive in this environment, in the form of improved risk management techniques, more diverse earnings, and strong capital bases. i am confident that banking organizations will continue to monitor and respond to risks while meeting customer demands in a way that strengthens our underlying financial structure in the years to come.

alan greenspan : structural changes in the economy and financial markets in the united states remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the america ’ s community bankers conference, business strategies for bottom line results, held in new york, 5 december 2000. * * * good morning. it is a great pleasure for me to join america ’ s community bankers for your winter conference. i would like to take the opportunity today to talk with you about some of the structural changes in the economy and financial markets that are challenging both bankers and policymakers. technological innovation, and in particular the spread of information technology, has revolutionized the conduct of business over the past decade and resulted in rising rates of productivity growth. accelerated productivity has been elevating standards of living, and it has been containing cost and price pressures, even as the economy operates at unusually high levels of labor resource utilization. higher prospective rates of return from the application of the newer technologies has led to a surge in business capital spending. and, in recent years, the capitalization of those higher expected profits has boosted equity prices and contributed to a significant pickup in household spending on houses, durable goods, and consumption more generally. also contributing has been the measurable rise in the turnover of existing homes, engendering a marked increase in realized capital gains. for a long time, those who were advancing funds shared the sanguine expectations of those using the funds for rapid increases in profits and incomes, and credit and equity were available with unusually low risk spreads. during the past couple of years, however, the widespread optimism that was apparent in financial markets has given way to some reassessment of risks and opportunities. this process has been underway ever since the global financial crisis in the fall of 1998. that episode forced many market participants to recognize the potential for international risks to feed back on us markets. events brought into sharper focus the possibility that liquidity in many markets can dry up simultaneously when fear spurs risk aversion, and an intense, near - term focus on protecting capital values markedly elevates the demand for liquidity. markets largely recovered from that episode, but an imprint was left in the form of wider credit spreads and more cautious behavior on the part of banks and other lenders. recently, wariness about risk again has increased as default rates on less than investment - grade bonds have moved higher, debt downgrades have become more commonplace, and many high - flying