##shadowed sarbanesoxley. today, however, much of fdicia has been forgotten. the reason? at many financial firms, bankers struck the theme of “ never again ”. that conviction spurred them to identify lessons learned and institute stronger controls on commercial real estate lending and buyout lending and maintain them. one sign that the effort mattered appeared as the commercial real estate market heated up later in the 1990s and lending terms started to loosen. deal flow came to a near - standstill as the controls established in the early 1990s kicked in. the market only resumed when underwriting standards retraced their way back to higher ground. so, as we benchmark progress in the recovery of financial institutions from the recent financial crisis, one area stands out. the early 1990s supervisory program comprised strengthening capital and liquidity, identifying problem exposures and placing them in workout, and developing a new business plan – there is one area where more progress will need to be made. the international community of supervisors has done a great deal to address the need for more and better quality capital through new capital standards. the identification and workout of troubled assets has made significant progress, which we can observe in the recovery of markets for some troubled assets. but global financial firms are still working on the new business plan. from the financial press, it ’ s clear that many large financial companies have been rethinking their strategies, often along the lines of increasing the focus on nonfinancial businesses and households and reducing the focus on expanding capital markets businesses. but i believe we are more at the beginning than toward the end of that process of reconsideration. in my personal view, the reconsideration of business plans needs to incorporate the longterm macroeconomic and technology trends even as they incorporate the lessons learned from the financial crisis. those business plans need to look ahead five years or more to position the financial firms and, with them, the financial system for the opportunities and risks that lie ahead. we will need to meet the long - term challenges of changes in the global macroeconomy, the distribution of growth opportunities and the distribution of wealth, and the speed and power of technological change. bis central bankers ’ speeches since so much opportunity has developed elsewhere in the world, how will the public sector reform agenda impact the global banking activities of financial institutions? we do not know yet how the reform agenda will affect the international activities of g - sifis, although we can see some early indications.

to meet capital needs. another long - run macroeconomic force has gathered substantial momentum in the last decade : the shift of income, wealth and economic energy from the so - called advanced economies of the united states, japan and europe to the so - called emerging economies. ten years ago, the emerging market countries accounted for about 20 percent of world gdp – the advanced economies 80 percent. today the proportion is 40 / 60, and the emerging market countries continue to grow substantially faster than the large advanced economies. yes, china is an important component of that growth, but the trend reflects strong performance in recent years in many regions of the world outside the advanced economies. a further long - run force, seen as the most disruptive, is technology. at one time, the financial system, perhaps until the 1970s or 1980s, played an important role in searching for savers / investors to contribute to financing those major investments. much of the work of identifying and linking the sources and the uses of funds has been facilitated or even taken over by technology – just think of the ubiquity of trading platforms, screens, and financial news and, beyond that, the increasing automation and artificial intelligence applied to credit evaluation, financial analysis, and trading activities. i mention these three long - run forces because the financial industry has been and still is adapting to these trends. indeed, the major transformation in the u. s. financial industry that bis central bankers ’ speeches occurred in the course of the 1980s and 1990s – the development of over - the - counter derivatives markets, the shift toward a larger role for securities markets relative to banking markets – was just such an adaptation to the long - run forces of change. the shift reflected the growth of institutional wealth and the power of technology, ubiquitous information and expanded financial know - how. in 1986, the derivatives markets were still nascent and securitization had just begun to spread outside the mortgage markets in the united states. at that time, a task force of central bankers, the precursor to today ’ s committee of the global financial system, which reports to the global economy meeting of 31 central bank governors, published a volume titled recent innovations in international banking. 1 the report was notable for being among the first to describe what was then a set of new financial instruments, such as over - thecounter derivatives and the expanded use of financial options. the study noted the tremendous momentum behind the 1980s wave of financial innovation, the likelihood of those forces continuing, and the changes already