should they be expected to. we can lean against house prices by increasing the cost and restricting the availability of credit, but we cannot alter the supply of land or buildings, and should not be held responsible for the housing market. our job ( and capability ) is to limit financial stability risks and keep overall inflation under control. when in doubt, a bias towards prudence is probably a good thing. you might expect a conservative central banker to say that, but i think there is a good deal of evidence in favour of optimism bias amongst borrowers and lenders ( or perhaps simply an expectation of being rescued if things go sour ). 2 there is a long tradition to this view, all the way back to adam smith :'the over - weening conceit which the greater part of men have of their own abilities is an ancient evil remarked by the philosophers and moralists of all ages. their absurd presumption in their own good fortune has been less taken notice of. it is, however, if possible, still more universal. there is no man living who, when in tolerable health and spirits, has not some share of it. the chance of gain is by every man more or less overvalued, and the chance of loss is by most men 1 / 6 bis central bankers'speeches undervalued, and by scarce any man, who is in tolerable health and spirits, valued more than it is worth.'adam smith low inflation was our monetary policy challenge for the 4 to 5 years prior to the covid - 19 pandemic, driven by high international savings, a greater than 70 percent fall in oil prices, the international flow of labour, digitisation, and global competition keeping downward pressures on prices. however, just when we thought we had things back to about an even keel in terms full employment and inflation at target at the end of 2019, the global pandemic came and knocked everything for six. anticipating a very deep and prolonged recession, monetary and fiscal policies went into emergency over - drive. fortunately, the combination of these policies, health restrictions and sound private sector balance sheets avoided an economic crash and supported a fairly quick and strong recovery. 3 what do i take from these experiences of economic trends, cycles, and shocks? firstly, smooth sailing is rare : the economy at equilibrium ( sailing on calms seas with neutral policy settings ) is as much the outlier in the distribution of economic circumstances as is the rare instability we wished

to this stacking of leverage may be exacerbated by interconnections within intermediation chains. those could include overlapping management of private credit and private equity, private credit being provided to businesses sponsored by private equity, and unobserved provision of leverage to private credit funds by other financial intermediaries. moreover, few private credit providers have experienced a complete credit cycle, which makes it difficult to predict how the industry might respond to a negative shock. i will now move to a discussion of stablecoins, which are digital assets that seek to maintain a stable value relative to a reference asset such as a national currency. they may also be accepted in different parts of the payment system. with assets under management of around $ 170 billion, stablecoins have a relatively small footprint in the u. s. 5 they are not widely used as a cash - management vehicle or for transactions for real economic activity but are generally used for digital asset investments. stablecoins lack a comprehensive federal regulatory framework, and many u. s. dollar - denominated see figure 4. 5 in board of governors of the federal reserve system ( 2024 ), financial stability report ( washington : board of governors, november ), p. 41, https : / / www. federalreserve. gov / publications / files / financial - stability - report - 20241122. pdf. - 10 stablecoins operate abroad. stablecoins could scale quickly, particularly if the stablecoin is supported by access to an existing customer base. the fact that stablecoins are pegged to a reference asset makes them structurally vulnerable to runs. if a run on a large stablecoin were to occur, liquidation of the assets backing the stablecoin could be disruptive, especially if those assets were linked to other funding markets, like commercial paper or certificates of deposit. some stablecoins have restrictions on redemptions, which can help reduce vulnerabilities, assuming that investors alter their expectations to reflect such restrictions. questions have emerged about the role of stablecoins in intermediation chains, including the use of leverage by stablecoin investors and the use of stablecoins to obtain leverage — for example, by serving as loan collateral. i will continue to monitor developments in these areas. now, i would like to move to cyberattacks and similar events — such as hardware or software failures — which are becoming more common. the number of cyberattacks on financial