of the firm must be supported by rigorous internal controls and effective risk management. an effective internal control apparatus is critical to provide reasonable assurance that the information produced by the organization is timely and reliable and that errors and irregularities are discovered and corrected promptly. such an apparatus is also needed to promote the firm's operational efficiency and to ensure compliance with managerial policies, laws, regulations, and sound fiduciary principles. effective risk management is based on a foundation of good corporate governance and rigorous internal controls. taking calculated risks is part of any business enterprise. that is well understood. at the same time, each firm needs to have in place the technical systems and management processes necessary not only to identify the risks associated with its activities but also to effectively measure, monitor, and control them. an effective risk management and control structure is not sufficient, however, if it is not accompanied by an institutional culture that ensures that written policies and procedures are actually translated into practice. ultimately, a firm's culture is determined by the board of directors and the senior management it installs. in particular, the actions of senior management and the consistency of their decisions and behavior with the values and principles they articulate are critical to shaping firm culture. it is vital that managers make certain that their commitment to an environment that includes effective risk management and rigorous controls filters fully down the line to all employees in their organization. official regulation and supervision provide a second line of defense against financial instability. governments have long recognized that banking and other financial institutions, because of the nature of the functions they perform, must be subject to at least some form of regulation and official oversight. governments have a broad mandate here. their job is to ensure that markets operate in a fair, transparent, and efficient manner, and that participants comply with the rules of the game. governments must not rely on outdated notions as to what constitutes risk and effective risk management. official supervision must evolve in line with the way financial institutions manage their activities, which is increasingly across business lines rather than across legal entities. the basel committee on banking supervision, which i chair, has developed principles for sound and effective banking supervision and continues to add to its guidance on minimum and advanced supervisory practices. its proposed revisions to the basel capital accord call for these principles to be applied to all internationally active banks within a more dynamic, risk - based, and process - oriented framework. the revisions are intended to align regulatory capital requirements more closely with underlying risks and to provide banks and their supervisors with a range of options

john c williams : the joys of spring remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the 21st annual bronx bankers breakfast, bronx, new york, 10 may 2019. * * * as prepared for delivery it ’ s an honor to be kicking off bronx week, and i ’ d like to thank borough president ruben diaz, jr., for the kind invitation. i first visited the bronx — and first met ruben — back in november, when i also spent time with students discussing their plans for the future. i was particularly impressed by their talent, energy, and enthusiasm, which is a true reflection of this vibrant and proud community. today i ’ m going to share some brief remarks on the national and global economy. i ’ ll then discuss what that means for monetary policy today and going forward. for me, the most interesting part of this event is hearing and responding to your questions, so please, don ’ t be shy when i open the floor for discussion. i ’ ve warned you that monetary policy is on the agenda, so before i go any further, i have to give the usual fed disclaimer that everything i say reflects my own views and not necessarily those of the federal open market committee or anyone else in the federal reserve system. the u. s. economy with that out of the way, let me start by saying the u. s. economy is in a very good place. late last year, as the long, dark winter closed in, there were considerable jitters in financial markets, with some observers fretting that the economy may be on the verge of a hard landing. indeed, there was a lot of talk about the possibility of a recession looming. i am happy to report that the economy has emerged from the new york freeze. the sun is out, the tulips and the cherry blossom are now in full bloom and the picture of the economy is similarly rosy. in the first four months of the year, the u. s. economy added over 800, 000 jobs, and the unemployment rate is now 3. 6 percent — the lowest level in nearly 50 years. the latest gdp numbers indicate that the economy remained in high gear through the first quarter, with growth clocking in at an impressive 3. 2 percent annual rate. despite this very strong economy, we are not seeing any signs of inflationary pressures. in fact, the latest inflation data have come in lower than expected,