financial sector hinges on the strength of the balance sheets of households, businesses, and financial institutions, as financial institutions'assets are the liabilities of these sectors. the federal reserve monitors and assesses potential vulnerabilities that may develop because of interactions among key participants. we do that by focusing on the safety and soundness of individual supervised institutions and by looking across the entire 1 / 4 bis - central bankers'speeches financial and nonfinancial system for potential risks and vulnerabilities. these risks and vulnerabilities can include elevated valuation pressures, excessive borrowing by households and businesses, excessive leverage in the financial system, and elevated funding risks. in other words, at the federal reserve, we use both microprudential and macroprudential approaches to monitor the health of financial institutions and the financial sector. the recent banking stress events remind us that risks and vulnerabilities in financial markets are continuously changing. that is why the staff at the federal reserve is constantly monitoring domestic and foreign financial markets and institutions, as well as the financial condition of households and businesses, with the goal of identifying current and future vulnerabilities. such forward - looking financial stability monitoring helps inform policymakers about ongoing vulnerabilities in the financial system that may amplify a range of potential adverse events or shocks. the u. s. financial system and economic outlook u. s. financial markets and institutions remain resilient even though financial stability risks and vulnerabilities in the u. s. financial system have increased since the recent stress events. conditions in the banking sector have stabilized thanks, in part, to decisive emergency actions taken in march by the federal reserve, the federal deposit insurance corporation, and the treasury. the federal reserve, using existing regulatory and supervisory tools, is working to ensure that banks improve and update their liquidity, commercial real estate, and interest rate risk - management practices. i expect spending and economic growth to remain quite slow over the rest of 2023, due to tight financial conditions, low consumer sentiment, heightened uncertainty, and a decline in household savings that had built up after the onset of the pandemic. inflation has come down substantially since last summer, but it is still too high, and by some measures progress has been decelerating recently, particularly in the core services sector. while it is reasonable to expect that the recent banking stress events will lead banks to tighten credit standards further, the amount of tightening and the magnitude of the effect such

stanley fischer : housing and financial stability speech by mr stanley fischer, vice chair of the board of governors of the federal reserve system, at the dnb ( netherlands bank ) - riksbank ( sveriges riksbank ) macroprudential conference series, amsterdam, netherlands, 20 june 2017. * * * i am grateful to elizabeth klee, andreas lehnert, mary tian, and alexandros vardoulakis of the federal reserve board for their assistance. views expressed in this presentation are my own and not necessarily those of the federal reserve board or the federal open market committee. it is often said that real estate is at the center of almost every financial crisis. that is not quite accurate, for financial crises can, and do, occur without a real estate crisis. but it is true that there is a strong link between financial crises and difficulties in the real estate sector. in their research about financial crises, carmen reinhart and ken rogoff document that the six major historical episodes of banking crises in advanced economies since the 1970s were all associated with a housing bust. 1 plus, the drop in house prices in a bust is often bigger following credit - fueled housing booms, and recessions associated with housing busts are two to three times more severe than other recessions. 2 and, perhaps most significantly, real estate was at the center of the most recent crisis. in addition to its role in financial stability, or instability, housing is also a sector that draws on and faces heavy government intervention, even in economies that generally rely on market mechanisms. coming out of the financial crisis, many jurisdictions are undergoing housing finance reforms, and enacting policies to prevent the next crisis. today i would like to focus on where we now stand on the role of housing and real estate in financial crises, and what we should be doing about that situation. we shall discuss primarily the situation in the united states, and to a much lesser extent, that in other countries. housing and government why are governments involved in housing markets? housing is a basic human need, and politically important and rightly so. using a once - popular term, housing is a merit good it can be produced by the private sector, but its benefit to society is deemed by many great enough that governments strive to make it widely available. 3 as such, over the course of time, governments have supported homebuilding and in most countries have also encouraged homeownership. 4 governments are involved in housing in a