advanced economies. and these differences are reflected in our assessment of vulnerabilities. we fully recognise that some vulnerabilities may be more relevant for emerging market economies, and others for advanced economies, or for different sets of jurisdictions. for example, the urgency policymakers ascribe to some of the risks relating to cryptoassets and crypto - markets differs across countries. in some economies, the most pressing concern is the potential loss of monetary sovereignty. in other economies, the risks of money laundering and fraud are perceived to be more urgent. the fourth and final guiding principle, is that the fsb leverages on this diversity of its membership. there lies tremendous strength in that diversity. fsb members not only come from different kinds of economies, but they are also represented by different kinds of authorities : ministries of finance, central banks, and securities and market authorities. 2 / 6 bis - central bankers'speeches our members also include global standard - setting bodies and international organisations. many of those members carry out and publish financial stability assessments. the fsb's vulnerabilities assessment therefore builds on those analyses. with these four guiding principles, i have given you a brief and mainly theoretical outline of the fsb's financial stability surveillance framework. i hope that this approach, this way of thinking about how to enhance the resilience of the global financial system, provides you with some stimulus for today's discussions. but what does it look like when we actually apply this framework? to illustrate this, allow me to touch on several of the key fsb priorities that are also on your agenda today. first, i will focus on the cyclical vulnerabilities that emerge from the current outlook. the combination of rising inflation, tightening financial conditions and the fallout from russia's invasion of ukraine has led to a synchronised slowdown in global economic activity. this is occurring against a backdrop of high levels of debt of households, nonfinancial corporates and sovereigns. the latter implies that some governments have limited fiscal space to provide additional targeted policy support. and given the increases in inflation, central banks also have less policy space to react to financial stability shocks. although this outlook is challenging, so far the global banking system has shown itself to be resilient. global financial markets have largely coped in an orderly manner, with limited and temporary support when necessary. and systemic financial institutions have shown resilience to market strains – in large part due

fiscal house in order, but at a pace that does not forestall a sustained economic recovery. what is needed here is fiscal consolidation that begins slowly, builds over time to substantial magnitude, and is difficult to dismantle – i. e., it requires the commitment of both political parties. the decision of how big the u. s. government should be and what functions it should perform is a political decision that i leave to the voters and our legislators. however, as a nation we need to acknowledge that we must be willing to pay for whatever government services and transfers we want to have. we should not assume that an excess of global savings will always be available to easily finance our public deficits. to be more precise, as of the first quarter of 2011 with statistical discrepancy of 1. 2 percentage points attributed to private balance, the figures are as follows : government balance – 9. 5 percent + 6. 3 percent private sector balance equals current account balance of – 3. 3 percent. bis central bankers ’ speeches the choice of fiscal sustainability is not a political one, it is an economic one and if we do not act voluntarily and preemptively, the market will inevitably force the outcome later – most likely in a much more difficult and messy fashion. moreover, we must recognize that the rest of the world is closely monitoring our ability as a nation to come to grips with our long - term fiscal challenges, and to pay our debts when they come due. this is an important litmus test of our credibility and ability to exercise global economic leadership. but the challenges extend far beyond fiscal policy. we, as a nation, have to take steps that facilitate the needed structural adjustment of u. s. economic activity that will position us to thrive in the next chapter of global economic transformation. we need to make sure the next business cycle will be more sustainable than the last, which was built on an unstable foundation of asset price gains, easy credit and outsized financial - sector profits. this will require a shift in orientation from consumption to export and investment - led growth. as emes have shown us, comparative advantage and global competitiveness are not inevitable consequences of factor endowments – they are the result of the choices we make as nations. there are no easy answers or quick - fix solutions. but in this regard, ensuring broad access to educational opportunity and improving opportunities for people to retool their skills mid - career so they can compete in a rapidly evolving global economy are important