klaas knot : rebuilding resilience - the financial system after the covid crisis keynote address by mr klaas knot, president of the netherlands bank, before the international symposium of the national association for business economics, 11 may 2021. * * * it ’ s an honor to speak at this international symposium of the national association for business economics. i think we all share a fascination for economics here. having worked in academia, the imf, the dutch finance ministry and the central bank, i live and breathe economics. so i feel very much at home here. “ my friends, i want to talk for a few minutes with the people of the united states about banking. ” so began, on march 12, 1933, the first of about thirty fireside chats that president roosevelt delivered over the radio. it was eight days after his inauguration. he had spent his first week coping with an epidemic of bank closures that affected households in every state. three days after closing down the entire american banking system, congress passed the emergency banking act. roosevelt used it to create federal deposit insurance when the banks reopened. that sunday night, on the eve of the end of the bank holiday, roosevelt spoke to a radio audience of more than 60 million people. he told them in clear language “ what has been done in the last few days, why it was done, and what the next steps are going to be. ” the result was a remarkable turnaround in the public ’ s confidence. since this, almost iconic, banking crisis of 1933, we have seen financial crises in all shapes and sizes throughout the world. and now, the covid crisis poses yet a new challenge to the financial system. how has the financial system stood up to this latest test? and what can we learn from it for the future? these are the questions i want to address with you today. first, i will reintroduce you to the concept of systemic risk. i will argue that this has been the primary ingredient in financial crises throughout history, from 1933 to the 2008 global financial crisis. i will then discuss what governments and regulators have done to strengthen the financial system. i will explain how the financial reforms of the past ten years helped to cushion the impact of the covid crisis, especially in the banking sector, but that systemic risk revealed itself in other parts of the financial system. i will end by discussing how we can address these new vulnerabilities in the financial system and strengthen its overall res

##nchments more than doubled in q2 from the previous quarter, mainly in the wholesale trade and transport equipment sectors. the performance of the financial services and the sector ’ s employment situation could continue to be creditable under current challenging circumstances, but we cannot be complacent. we must press on with the sector ’ s transformation efforts, in investing in the workforce for the future. 5. mas has three priorities to support the local workforce in our financial sector. these are : 1 / 6 bis central bankers'speeches protecting livelihoods, creating opportunities, and strengthening the singapore core. protecting livelihoods 6. our top priority is to keep workers employed while deepening their capabilities. labour market conditions will become more challenging, with some firms downsizing and others imposing hiring freezes. jobs will take a different form too, as financial institutions ( fis ) speed up on their digitalisation to cater to the extensive shift in customers ’ preferences. we therefore need to keep workers employed as much as possible. we are heartened that some fis, including large employers like bank of china, bank of singapore, dbs, great eastern life, maybank, ntuc income and ocbc are committed to avoid any redundancy exercises where they can. mas urges more fis to do their part to support their workers and take a longer - term view in investing in their capabilities. mas will support workers to reskill in functions which are becoming more digitalised to harness the potential of technology in new and expanded roles. 7. the nature of jobs has evolved rapidly as the use of technology becomes more pervasive in the financial services sector, from the design, development to delivery of products and services. therefore, jobs will need to be redesigned and transformed too, and employees will need to acquire new skills and adapt to new work requirements. mas and ibf, with the support of workforce singapore, have worked closely with our tripartite partners over the years, to reskill and redeploy workers into new or expanded jobs. 8. thus far, 25 local and foreign fis have committed to support close to 5, 000 employees, of whom 3, 000 have embarked on this journey. of these, 900 have completed their training and are in their new roles. these efforts have helped to avoid retrenchment of staff who might otherwise be displaced, and contributed to the steady decline in retrenchments in the financial sector, from the peak of 2, 300 in 2016 to 1, 300 in