it turns out to be depends upon how well the system is prepared to deal with bad events. if the system has skimped on liquidity and is carrying too little capital, then it is likely to amplify shocks. conversely, if the financial system has adequate buffers, it is better able to support the economy in difficult times. the aftermath of the global financial crisis is a good example of what can happen. this chart ( graph 1 ) shows how bank lending has grown – or in the case of europe, contracted – since the financial crisis in 2008. many banks in europe and the united states simply did not have large enough buffers for the events that unfolded. even today, capital levels remain an issue for some european banks. insufficient capital means that some banks are constrained in their ability to provide finance and helps explain why banks have not taken advantage of the european central bank ’ s offer to lend them money at an interest rate below zero. the european economy has suffered as a result. in the united states, the picture is more positive, partly because there were more successful efforts early on to rebuild the buffers in the system. 2 / 11 bis central bankers'speeches in australia, it has been a different story. the banking system did have the capacity to support the economy during the global crisis, although it is important to point out that it did this with the assistance of the australian government through various guarantee schemes following the freezing of global capital markets. around the world, the experience of recent years has rightly caused banks and their regulators to think again about how large the buffers should be. and the answer has been that they should be larger than they were before. this has been true in australia too, despite the starting point here being better than in many other countries. since the beginning of 2015, the major banks have raised around $ 28 billion from new equity and retained earnings, significantly increasing their capital relative to their assets ( graph 2 ). banks are also holding a larger share of their assets in liquid form and have changed the composition of their funding towards more stable sources ( graph 3 ). during 2016, liquid assets have accounted for around 20 per cent of the major australian banks ’ total assets, up from an average of around 15 per cent in the years preceding the financial crisis. banks have also increased their use of deposits and long - term debt and reduced their use of short - term debt. 3 / 11 bis central bankers'speeches 4 / 11 bis central bankers'speeches

janet l yellen : " welcoming remarks by chair yellen at a conversation with the chair : a teacher town hall meeting " speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at a conversation with the chair : a teacher town hall meeting, washington dc, 12 january 2017. * * * thank you, and thank you to all the educators who have come to the board this evening or travelled to one of the fed ’ s regional reserve banks to watch and listen via the webcast. i am very much looking forward to hearing from you about teaching economics, and i am eager to respond to your questions. for that reason, and also because i expect that school starts very early tomorrow for many of you, i will try to keep my remarks brief. but i do have a message to impart about the work you do, which is vitally important not only to your students, but also, i believe, to the world they will soon inherit and even to the mission of the federal reserve. first and foremost, of course, like all teachers, you are helping prepare your students for successful and rewarding lives. the knowledge you impart and the intellect and talents you help develop are powerful tools your students can use to build those lives. like some other subjects students encounter in school, economics teaches analytical and critical thinking skills that can aid in the development and success of anyone. part of success for your students is economic success — as capable, creative, and productive members of the workforce and as consumers adept at managing their finances. economics provides knowledge and skills of practical use in college and in the workplace, and it also provides skills to plan and make wise financial decisions, which are some of the most important and consequential that we face in life. your students benefit very directly from this education, but so does everyone else in society. everyone is engaged in and depends on the economy, and nothing is more critical to a healthy and growing economy than the capability, creativity, and productiveness of its workforce. whenever i am asked what policies and initiatives could do the most to spur economic growth and raise living standards, improving education is at the top of my list. in addition to the role you play in preparing students for jobs and careers, you also help prepare them to be responsible consumers. the economy needs productive workers, and it also depends on consumers, whose individual spending decisions, as most of you surely have taught in class, collectively account for two