william c dudley : financial regulation nine years on from the gfc where do we stand? remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, on the panel " financial regulation nine years on from the gfc - where do we stand? ", at the g30 ’ s 76th plenary session, federal reserve bank of new york, new york city, 3 december 2016. * * * beverly hirtle, antoine martin, susan mclaughlin and joseph tracy assisted in preparing these remarks. thank you for the opportunity to participate in this panel discussion. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee or the federal reserve system. in assessing where we are eight years after the financial crisis, i would make three broad observations. first, we have made considerable progress in bolstering the safety and soundness of the global financial system. in the u. s., which was the epicenter of the crisis, the risk of a failure of a systemically important financial firm has declined considerably. second, although significant progress has been made toward ending “ too big to fail, ” there is still much more to do. while the risk of failure of a global systemically important financial institution has diminished, it has not been eliminated. without a well - functioning resolution process, the consequences of such a failure could still be catastrophic. much headway has been made in the u. s. in developing a single point of entry resolution regime with a layer of total loss - absorbing capacity ( tlac ) that would facilitate recapitalization and enable an orderly resolution. however, significant challenges remain, especially on managing resolution on a cross - border basis. third, bank leaders still have much to do to rebuild the trustworthiness of their industry. long after the financial crisis, conduct failures have persisted. we need financial firms to foster cultures that are intolerant of bad conduct and that are attentive to incentive structures that may encourage such behaviors. so, let me begin with the good news. the u. s. financial system is much more resilient now than it was a decade ago on the eve of the financial crisis. this progress reflects a number of initiatives ― some focused on the ability of firms to absorb shocks, and others oriented at reducing structural vulnerabilities within the financial system that spanned the activities of firms and their counterparties. changes made to capital and

, we have seen prices of digital consumer goods fall significantly. digitalisation may sometimes also contribute to price transparency, which, by diminishing firms'local market power, could affect inflation indirectly. the effect of demographic trends on inflation is less obvious. if the dominant effect were greater willingness to save for retirement, one channel would go through a decline in the natural rate of interest, implying that monetary policy could turn out tighter than intended – leading to lower inflation. 3 possible post - pandemic inflation factors the period of missing inflation came to an abrupt end in 2021, when the pandemic began to lose its grip. the surge in energy prices, supply chain distortions induced by containment measures as well as supply bottlenecks due to strong consumer goods demand all fuelled the return of inflation, in a way never seen since the start of the monetary union. the russian attack on ukraine amplified this return, especially owing to a further drastic rise in energy prices. central banks around the globe had to act decisively to curb high inflation. in the euro area, the ecb governing council increased interest rates ten times in a row, a pace of tightening unseen since the start of the euro. since late 2022, the wave of inflation has been receding. energy price dynamics even reached negative territory, supply - chain strain eased, and core inflation has started to decline. in the euro area, inflation is expected to return to values of around 2 %. this is evidence of the success of the eurosystem's tight monetary policy. but looking ahead, do we need to prepare for a return to the world of too low inflation we were used to in the last decade? i am not convinced – for at least three reasons. first, take geopolitical uncertainties. we have just learned the hard way that costefficient global production chains and trade patterns may come to a sudden halt. of course, it makes no sense to fully abandon the advantages of international division of labour altogether. however, to improve resilience, some form of de - risking seems reasonable, especially in the case of strategically important goods. 4 we should keep in mind that greater security for supply chains is likely to come with some additional price pressures. second, take demographics. previously, many focused on the effect of demographics on propensity to save. now, a shortage of labour is becoming more and more visible in developed countries. for example, in germany, there are currently 1. 2 va