mismeasurement of subprime mortgage risks which turned into a systemic problem. ii. macroprudential analysis : a policy - maker ’ s view [ slide 5 ] economic research has a key role in the design of better regulation. research can inform regulators in their search for the right balance between robustness and sophistication of regulatory rules. we also need high quality cost - benefit and impact analyses of regulation in order to assess the effects of regulation on financial institutions and markets, and, ultimately, on the real economy. a recent example of the use of network analysis is toivanen, m. ( 2015 ) : essays on credit contagion and shocks in banking. doctoral dissertation, university of vaasa. bis central bankers ’ speeches in addition to the traditional financial regulatory rules we should think of safeguarding financial stability with macroprudential policy more generally. in this more holistic approach the role of analysis and research is, if possible, even more important than in the design of the traditional microprudential regulatory rules. when talking about macroprudential policy, some observers have yet found it useful to make a distinction between it and regulation. paul tucker, for instance, defines macroprudential policy as “ dynamically adjusted financial regulation ”. given that definition, one could argue that a well - designed and stringently implemented financial regulation is the first line of defense against systemic risks. macroprudential policy – that is, the dynamic adjustment of regulation – is the important second line of defense. 3 high - quality analysis reduces the inaction bias [ slide 6 ] most economists and policy - makers seem to agree that the key objective of the macroprudential policy is to provide additional resilience to financial institutions and the financial system against cyclical and structural systemic risks and vulnerabilities. but that is not sufficient. we also need macroprudential policies that can effectively restrain an excessive build - up of leverage and growth in household and corporate borrowing and thus dampen the credit and financial cycles. in the euro area, this need is particularly acute, as the economic cycles are currently diverging across countries and as the key monetary policy rates will stay low for a prolonged period of time. to prevent or at least dampen potentially destructive financial booms, the authorities must be able to take early macroprudential actions. to do that, the role of reliable early warning indicators is critical. i welcome the strong emphasis of this conference on

and uncertainty about the short - term reactions of financial markets and the real economy. however, they are not unreasonable or radical or inconsistent with our experience in dealing with past crises. they are focused on the longer run – reflecting a sharp awareness that policy geared too long toward extensive accommodation undermines market discipline and encourages speculative activities. put another way, these actions reflect the view that the longer exceptionally accommodative monetary policies remain in place, the greater the danger that resources will be misallocated within and across world economies. given the wide differences in views around these issues, i want to take time this evening to share my perspective on u. s. monetary policy choices and their effects on economic and financial outcomes. recovery is under way the financial crisis is over, and the u. s. economy is recovering. gdp growth in the united states averaged 3. 0 percent from the third quarter of 2009 through the fourth quarter of 2010. and it is worth noting that for the same period, the international monetary fund estimates that global gdp growth averaged 4. 9 percent. also, the united states added bis central bankers ’ speeches 1. 5 million jobs into the private sector over the one - year period ending in february of this year. other parts of the world, especially asia, have experienced particularly strong growth. while parts of europe and the u. k. have grown less robustly, the fact remains that the u. s. and much of the world is experiencing sustained economic growth. with the united states and many world economies experiencing such growth and with the u. s. financial crisis over, i would expect to see a change in policy in which stimulus put in place at the height of the crisis would be throttled back. however, this change in policy is on hold in the united states. the reason for the delay is the existence of significant productive capacity that remains unused in many of the developed nations. while the u. s. economy has clearly strengthened, it has not yet returned to pre - crisis output and employment levels. its unemployment rate, for example, remains near 9 percent. in the u. k., unemployment remains near 8 percent. thus for many the issue of policy turns on one ’ s confidence in the long run economic trends and the degree of monetary accommodation needed to ensure that those trends continue. shifting economic risks the monetary policy being implemented currently within the united states and much of the world is more accommodative now than at the height of the crisis.