jerome h powell : a financial system perspective on central clearing of derivatives speech by mr jerome h powell, member of the board of governors of the federal reserve system, at the 17th annual international banking conference “ the new international financial system : analyzing the cumulative impact of regulatory reform ”, chicago, illinois, 6 november 2014. * * * the views expressed here are my own and are not necessarily shared by other members of the federal reserve board or the federal open market committee. thank you for the opportunity to address the important topic of how the financial system and its regulation have evolved in response to the global financial crisis. i will focus my remarks on the global initiative to expand central clearing of over - the - counter ( otc ) derivatives. while we have made significant progress in enlisting central clearing to reduce systemic risks, i will argue that there is a good deal more to do to ensure that the reforms achieve their potential and minimize the possibility of unintended and undesirable consequences. prior to the crisis, the then highly opaque market for otc derivatives grew at an astonishing and unsustainable pace of nearly 25 percent per annum in a context of relatively light regulation and bilateral clearing. 1 with the benefit of hindsight, we know that along with this torrid growth came an unmeasured and underappreciated buildup of risk. the spectacular losses suffered by american international group, inc., or aig, on its derivatives positions, and the resulting concerns about the potential effect of aig ’ s failure on its major derivatives counterparties, serve as particularly apt reminders of the wider failures and weaknesses that were revealed by the crisis. the threats posed were global, and the response was global as well. in september 2009, the group of twenty ( g - 20 ) mandated that all sufficiently standardized derivatives should be centrally cleared – a sea change in the functioning and regulation of these markets. and in the five intervening years, substantial progress has been made in the united states and abroad to implement this reform and begin to reduce systemic risk in these markets. according to public data, roughly 20 percent of all credit derivatives and 45 percent of all interest rate derivatives are now centrally cleared – amounts that have grown substantially since 2009, when central clearing of credit derivatives began and the amount of cleared interest rate derivatives was at roughly one - half of its current level. 2 these amounts should continue to grow over time as central clearing and, especially, client clearing requirements take effect in more jurisdictions. given

jon nicolaisen : what should the future form of our money be? speech by mr jon nicolaisen, deputy governor of norges bank ( central bank of norway ), at the norwegian academy of science and letters, oslo, 25 april 2017. * * * origins of the central bank the dutch financier johan palmstruch arrived in stockholm in 1647. some ten years later, he was granted permission to open a private bank, stockholms banco, where he combined two important innovations. the first of these, pioneered by palmstruch, was to use customer deposits to fund lending. the second utilised johannes gutenberg ’ s invention, the printing press, to print the first european banknotes. stockholms banco was authorised to issue banknotes backed by the copper and silver coins in use at the time. coins could be deposited at the bank in return for banknotes, and banknotes could be exchanged for copper and silver at the bank. the banknotes proved to be popular and were soon in circulation. stockholm banco also offered loans in the form of banknotes. for the swedish king, karl gustav, this occurred at a convenient time. wars were in progress that had to be financed, and a bank that would offer loans was like manna from heaven. king karl gustav made good use of the money. sweden ’ s victory over denmark - norway in the 1658 dano - swedish war, leading to the permanent cession to sweden of the strategically and historically important territory of bahuslen in southeastern norway, was thus at least partly the result of a financial innovation. things did not end well for johan palmstruch. there were no rules to limit the loans that could be issued by the bank, and stockholms banco ’ s loans far outstripped the value of the copper and silver held by the bank. confidence in the banknotes began to evaporate, and their value fell. demand to redeem the banknotes for copper and silver was high, but stockholms banco did not have enough metal to meet the demand, and sweden experienced its first banking crisis. the bank was declared bankrupt and was liquidated. johan palmstruch was sentenced to death for irresponsible accounting. the death sentence was subsequently commuted, but palmstruch had to spend the rest of his life in prison. nonetheless, the stockholms banco crisis left a permanent legacy : in 1668, the authority to conduct banking operations was transferred to a bank that was later to become the ri