jerome powell : brief remarks brief remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at the global finance forum, washington dc, 20 april 2017. * * * thank you for inviting me to speak here today. 1 i will begin by looking back at the global financial crisis and the great recession, which were arriving on the horizon at about this time 10 years ago. for the united states and many other countries, this would turn out to be the most painful economic crisis since the great depression. the fact that we had a severe recession but not another depression is a tribute to the aggressive response of those who were in a position to act at that time. 2 in the event, the financial system avoided collapse but incurred severe damage and proved incapable, for a time, of performing its key functions. that was true of the largest investment and commercial banks, several of which either failed or required taxpayer support to survive. it was also true of the many pieces of the financial market infrastructure whose structural weaknesses contributed to the crisis, such as the triparty repurchase agreement ( repo ) market, the over - thecounter derivative market, and prime money market funds. the financial turmoil caused heavy damage to the real economy. payroll employment declined by almost 9 million ; over 7 million people lost their homes. 3 many young people entered a terrible job market ; research shows that this may adversely affect their careers for many years. many experienced workers who lost their jobs may suffer permanently lower income prospects. 4 the nation faced two big tasks after the crisis. we had to get the economy growing again so people could get back to work and rebuild their financial lives. and we had to return the financial system to good health and address the many structural weaknesses that had become apparent. today, the first of those tasks is well along. we have gone eight years without a subsequent recession - - one of the longest recoveries on record. employment is now almost 7 million jobs higher than its pre - crisis peak, with all of the net gains coming from the private sector. and with unemployment at 4. 5 percent, we are at or close to full employment. but all is not well. although job growth has been strong, gross domestic product has increased only about 2 percent annually since the crisis, held down by the weakest sustained period of labor productivity growth since world war ii. labor productivity - - the increase in output per hour - has increased only 1 / 2 percent per

year since 2011, about a quarter of its post - war average. the productivity slowdown has profound implications for our national well - being. this slowdown is a worldwide phenomenon, so it is likely that there are global forces at work. the slowdown has been associated with weak investment and a decline in output gains from technological innovation. we need a national focus on increasing the sustainable growth rate of our economy. 5 that means investing in our workforce to give them the skills and aptitudes they need to compete in the global economy. it means policies that reward work, and policies that support investment and research. for the most part, these policies are not in the purview of the federal reserve. what about the second goal? as with the economy, we have made great progress toward our goals. today, our financial system is without a doubt far stronger than it was before the crisis. the largest financial institutions now hold much higher levels of higher - quality capital. they hold higher levels of liquidity as well and are much less reliant on runnable short - term funding. they are subject to rigorous, forward - looking capital stress tests that recognize the dynamic nature of financial risks. and they have submitted several rounds of resolution plans that are helping to 1 / 3 bis central bankers'speeches ensure that they could be safely reorganized should all these other safeguards prove insufficient. our financial market infrastructures are also much stronger. the amount of intraday credit extended in the triparty repo market has been drastically reduced. last year, the securities and exchange commission implemented reforms that address weaknesses in the structure of prime money funds. and about 75 percent of interest rate and credit default swaps are now centrally cleared, which allows for greater transparency and more consistent risk management. 6 while the move to central clearing has made the system safer, we need to make sure that the central counterparties have the resources and risk - management practices to withstand plausible but severe shocks. 7 many of the statutory provisions and regulations put in place to effect these changes were novel ; it is not likely that we would have gotten everything exactly right on the first attempt. this is a good time to step back and ask what changes have worked and where adjustments should be made. indeed, along with the other financial regulatory agencies, the federal reserve is contributing to just such an exercise by the treasury department. as i share some of my views on these issues, i should emphasize that i speak for myself and not for my board colleagues or for