accept that there are always trade - offs, there are no free lunches, that for every plus there is a minus. we want everything at the same time, sometimes even mutually inconsistent things. but that is another matter. there is one area, however, where the czech population has been very conservative over a very long period of time, and that is the area of euro adoption. in the eurobarometer – a poll you all know – the czech republic remains the country where by far the largest share of the population has a negative view towards adopting the euro out of all the non - eurozone countries. roughly two thirds of czechs are against the euro. this is a higher figure than in sweden, which rejected the euro in a referendum in 2003. well, public opinion is not as anti - euro as in the uk, where at some point the euro was only “ slightly more popular than ebola ”, as i read in one british newspaper. but still, being for the euro is simply a total political non seller. if i were to summarise the arguments against joining, be it on the side of the general public or professionals, they would be roughly threefold : a. the first one is sentimental rather than economic. we have been living with our czech koruna, or crown, for quite some time and our country has a long history of monetary stability and stabilisation. by the way, we have had the same name for our currency ever since 1892, from the times of the austro - hungarian monarchy ( the crown is a monarchist name – what a paradox in our republic ) and there has never been any reason to rename it. the old adage says : if it ain ’ t broke, why fix it? if you have low and stable inflation on your own, you don ’ t need any credibility for your currency from abroad. b. the second argument is more economic. money matters. and monetary stabilisation matters. if you have shocks in the economy, something has to move to offset the shock. something has to be flexible. it is easier to accommodate shocks through flexible interest rates or a flexible exchange rate than through wages, unemployment or budget expenditure. we discussed yesterday how hard it can be if you don ’ t have monetary policy to adjust to shocks. this is a classical argument of monetary economics for the active role of elastic money when you don ’ t have flexible prices or wages. simple as that. and as we can see, the

the financial crisis have been remedied. important changes include mandatory clearing of standardized over - the - counter derivatives through central counterparties, or ccps ; more intensive supervision of systemically important ccps ; and reforms of the tri - party repo system and the money market mutual fund industry. but, even as we reduce or eliminate old vulnerabilities, we must not rest on our laurels, for new vulnerabilities will inevitably take their place. these accomplishments notwithstanding, i have no doubt that the current regulatory framework could be improved. indeed, the official sector should assess the efficiency and effectiveness of regulations on an ongoing basis. i agree with vice chairman quarles ’ observation that there is more we can do to make the regulatory regime more efficient, transparent, and simple — including relief for small banks, greater tailoring based on a firm ’ s level of systemic importance, and simplifying the volcker rule. 5 some of these changes have already been adopted or are in process. greater focus on incentives is needed but, i also think we must take a broader view of what characterizes a resilient and robust financial system. to that end, we need to carefully monitor the incentives that influence the behavior of financial firms and their employees. indeed, the record from the crisis and more recent years shows just how powerful incentives can be in driving firms and individuals to do things that are imprudent and / or unethical. bad incentives can lead to conduct that not only generates large risk exposures and market excess, but also erodes trust and confidence in the financial system. for example, the pre - crisis housing boom would not have gone so far, for so long, without the widespread breakdown in mortgage underwriting practices that was driven by poor incentives. 6 some examples of bad incentives that contributed to the financial boom and bust included : compensation practices at financial firms that rewarded volume and short - term performance over longer - term, sustainable returns ; the willingness of the credit rating agencies to designate tranches of subprime mortgages triple - a in exchange for fees paid by a small number of issuers of mortgage - backed 2 / 8 bis central bankers'speeches securities ; the willingness of fannie mae and freddie mac to use their implicit government support to take on large amounts of mortgage risk with very little capital backing ; the willingness of aig to use its triple - a rating to provide credit protection to banks and securities firms against complex mortgage obligations with little direct capital support