for individual firms and the financial system as whole. this can be resilience of a firm ’ s balance sheet in response to financial risk or an unexpected loss that depletes a firm ’ s equity capital or resilience of a firm ’ s culture in response to conduct risk or an unexpected fraud that depletes its cultural capital. 13 in all of these cases, a resilient firm will be better able to adapt and evolve in order to continue to function and provide the critical financial services necessary to support a growing and stable economy. thank you. 1 i thank stephanie chaly, robert fitchette, jim hennessy, jackie mccormack, and tom noone for helpful discussions and feedback on earlier drafts. 2 david j. snowden and mary e. boone, “ a leader ’ s framework for decision making, ” harvard business review, november 2007 3 the boston consulting group, staying the course in banking, march 2, 2017. 4 william c. dudley, ending too big to fail, november 7, 2013. 4 / 5 bis central bankers'speeches 5 john c. williams, now is the time for banking culture reform, june 18, 2018. 6 reforming culture and behavior in the financial services industry : progress, challenges, and the next generation of leaders 7 stephanie chaly, james hennessy, lev menand, kevin stiroh and joseph tracy, misconduct risk, culture, and supervision, december 2017. 8 john sterman, “ learning from evidence in a complex world, ” public health matters, 96 ( 3 ), 2006. for example, the overuse of antibiotics that spread resistant pathogens. 9 michael held, reforming culture and conduct in the financial services industry : how can lawyers help?, remarks at yale law school ’ s chirelstein colloquium, mar. 8, 2017. 10 banking standards board 11 richard h. thaler and cass sunstein, nudge : improving decisions about health, wealth, and happiness, 2009. 12 kurtz and snowden, “ the new dynamics of strategy : sense - making in a complex and complicated world, ” ibm systems journal, vol. 42, no. 3, 2003 ; and, david snowden and mary boone, “ a leader ’ s framework for decision making, ” november 2007, harvard business review. 13 see misconduct risk, culture, and supervision for more on the concept of “ cultural capital. ” 5 / 5 bis central bankers'speeches

in productivity was not completely unique to the united states, but it has not yet been matched by the other major economies, though that may be in prospect. what accounted for these achievements? this is important to try to understand, because it is important to assessing whether these trends are enduring or temporary, and what types of policies are likely to sustain them. there is no definitive consensus on this question, and economists have an interesting debate underway about how much of this was luck and how much was skill. most observers seem to attribute the record to the following mix of factors. the first, of course, is technology. we experienced during this period the benefits of a powerful technology shock that made possible a revolution in the productivity of investment, in transportation and communication costs, in business methods, in computing power, etc. given the speed with which technological advances are diffused, one might expect the benefits to have been more broadly spread among other economies, but that has not yet happened on a scale that is sufficient to narrow the growth gap. the extent of technological progress and its impact on economic growth were magnified by the openness and flexibility of the u. s. economy. the united states became significantly more open over the past decade, with imports and exports as a share of gdp rising by about 50 percent. this happened in part because of the impact of trade agreements like nafta and the uruguay round that lowered u. s. trade barriers, and in part because we stayed out of the way of the impact of technology and globalization and did not, on the whole, try to insulate the u. s. economy from the pressures of competition. we are by choice significantly more flexible than the other major economies. the major deregulations ( telecom, transportation, finance, etc. ) of the last two decades made us more so. we have relatively limited regulation of business activity, low barriers to entry by new firms, lower hiring and firing costs, and more worker mobility and turnover. a third key factor involves the u. s. financial system. our system has proven to be exceptionally good at matching capital to ideas, at rewarding innovation and penalizing failure, and relatively more resilient to shocks. in comparison to the other major economies, banks are a smaller share of our financial system and the capital markets play a greater role. securitization and other avenues for risk transfer advanced much more rapidly here. the venture capital, private equity and hedge fund parts of our financial system are