to the implications of any future reductions in the competitiveness of the markets most important for monetary policy implementation. similarly, we suggest that central banks ought to monitor potential future effects on the transmission mechanisms for monetary policy. monetary policy is simply too important to the health of all our economies to do otherwise. financial risk financial consolidation can affect the risks to both individual financial institutions and the financial system as a whole. importantly, our study concludes that existing policies appear adequate to contain individual firm and systemic risks now and in the intermediate term. however, looking further ahead, the study identifies several topics that deserve careful attention by policymakers. for example, we conclude that the potential effects of financial consolidation on the risk of individual financial institutions are mixed and that the net result is impossible to generalize. thus, we must evaluate individual firm risk on a case - by - case basis. consolidation seems most likely to reduce risk through diversification gains, although even here the possibilities are complex. on the one hand, diversification gains seem likely from consolidation across regions of a given nation and across national borders. on the other hand, after consolidation some firms shift toward riskier asset portfolios, and consolidation may increase operating risks and managerial complexities for those firms. diversification gains may also result from consolidation across financial products and services, although research suggests that the potential benefits may be fairly limited. in part because the net impact of consolidation on individual firm risk is unclear, the net impact of consolidation on systemic risk is also uncertain. however, as i noted consolidation clearly has encouraged the creation of a number of large and increasingly complex financial institutions. our study suggests that if such an institution became seriously distressed, consolidation and any attendant complexity might increase the chance that winding down the organization would be difficult or disorderly. we recommend that the risks to individual firms and to the financial system could be reduced by stepped - up efforts to understand the implications of working out a large and complex financial institution. because no institution is too big to fail, i believe that regulators should develop a clearer understanding of, for example, the administration of bankruptcy laws and conventions across borders ; the coordination of supervisory policies within and across borders ; the treatment of over - the - counter derivatives, foreign exchange, and other " market " activities in distress situations ; the roles and responsibilities of managers and boards of directors ; and the administration of the lender - of - last - resort function. i say stepped - up discussions are needed in some of these areas because considering adverse developments is or

however, it also tends to shift demand from unskilled to more highly skilled workers, potentially displacing unskilled workers in the process. job protection regulations that affect a firm ’ s flexibility to recruit and dismiss workers can interfere with this process, making it difficult both for newcomers to find jobs and for firms to adopt new technologies. the inability to adjust hours flexibly through the use of overtime, part - time and temporary work may also stifle innovation. according to the european car assembly association, similar research projects take much longer to complete in germany than in the united states because of shorter working hours and less flexible working conditions. as a result, they argue that german automobile manufacturers are less able to exploit the shorter product life cycles associated with more fashionable and high - tech cars. it is axiomatic that in a truly flexible labor market everyone who wants a job can find one – at some price. as technical change increases demand for skilled relative to unskilled labor, the unskilled workers must acquire new skills, find new jobs at lower relative wages or become unemployed. oecd data suggest that the united states and canada have been more successful than the other industrialized countries in achieving these adjustments and, therefore, in maintaining aggregate employment growth on a par with labor force growth in the face of differential rates of job growth by occupations. whitecollar, high - skilled employment increased at a much faster rate than employment in the other categories in nearly all cases in the g7 countries over 1979 - 95. in the united states and canada, white - collar, low - skilled employment also rose at healthy rates while blue - collar employment was little changed. in contrast, blue - collar employment fell sharply in most of the other countries. human capital of the three choices facing an unskilled worker in a fast - changing economy, acquiring new skills – that is, increasing one ’ s human capital – would seem, in general, to be preferable to either taking a pay cut or becoming unemployed. to what extent do american workers take advantage of such opportunities relative to the rest of the world? here the evidence is somewhat mixed. the us adult population has the highest rates of completion of upper secondary or higher education of any of the major industrialized countries. however, educational attainment rates are only part of the story as skills need to be continually upgraded in a world of rapid technical change. this does not suggest that educational attainment is unimportant ; in fact, there