will be some takeaways that you will find helpful in your capacity as ineds of banks. 9. fellow ineds, i have talked long enough and now is the time for me to introduce to you our keynote speaker for this conference. we are honoured and highly privileged to have mr andrew bailey, chief executive officer of the uk financial conduct authority, to fly all the way from london to join us today. andrew needs no introduction. before he joined the fca last year, he was the deputy governor in the bank of england and chief executive officer of the prudential regulation authority from april 2013 until june last year. so andrew is truly exceptional in the sense that he has been in charge of both the prudential and conduct sides of banking supervision, and is very well - respected internationally. he is therefore uniquely well placed to share with us his experience and insights. mr bailey, please. 2 / 2 bis central bankers'speeches

disinflation process too far, too fast. one very favorable aspect of our economic performance over the past few years has been the remarkable improvement in the federal budget picture. the deficit dropped to its lowest level in more than two decades in fiscal 1997, and yesterday the congressional budget office released projections that show the budget remaining essentially in balance over the next few years, moving to annual surpluses equal to 1 percent of gdp by the middle of the next decade. the reduction in federal borrowing to date and in prospect is already paying off for the u. s. economy by helping hold down long - term interest rates and, in turn, providing support to private capital spending and other interest - sensitive outlays. but much hard work remains to be done to ensure that the projected surpluses actually materialize and that we remain on track to address our longer - run fiscal and demographic challenges. the cbo projections provide a good starting point : they are based on sensible economic and technical assumptions and thus offer a reasonable indication of how the budget is likely to evolve over the next 10 years if economic conditions remain favorable and current budgetary policies remain in place. but, as cbo highlights in its latest report, such forecasts are subject to considerable error. indeed, as recently as last winter, when fiscal 1997 was already well under way, both cbo and omb were still overestimating that year ’ s deficit by more than $ 100 billion. in the case of cbo, about two - thirds of the error was in receipts, including nearly $ 50 billion more tax receipts than would have been expected based on the actual behavior of income as measured in the national income and product accounts. this overage helped lift the receipts share of gdp to an historical high. such “ tax surprises ” are nothing new - - in fact, in the early 1990s, growth of receipts fell well short of expectations based on the trends in aggregate income and the tax laws then in place. and, even after the fact, our knowledge about the sources of such surprises has been limited. thus, we cannot rule out the possibility that the forces behind last year ’ s tax surge will prove transitory and dissipate more rapidly than cbo has assumed, implying lower receipts and renewed deficits for the years ahead. indeed, all else equal, had the surprise fallen on the other side - - downward instead of upward - - we would be looking at non - trivial budget deficits at least through the beginning of the coming decade