I am delighted to be back at Duke University after spending many summers of my childhood here with my family visiting my uncle and his family. As you might know, my uncle Samuel DuBois Cook was a political theorist and the first African American professor tenured at Duke and at a major southern university. My family and I have many fond memories on this campus.
I am also happy to be with you in the Economics Department today to discuss financial stability.1
My own work as an academic has frequently reinforced the importance of financial stability in the United States and abroad. Early in my career, I examined the impact of underdevelopment in the Russian banking system on growth in post-Soviet Russia and the instability that can occur in a poorly regulated financial system. Years later, as an economist on the Council of Economic Advisers, I saw how weaknesses in the financial system contributed to instability in the euro area. These formative experiences shaped my view that the Federal Reserve’s work on financial stability is critical to the well-being of households, businesses, and the broader economy. This is one reason I particularly value the opportunity to serve on the Board’s Committee on Financial Stability.
I will focus my remarks on my assessment of financial stability risks, based on the Federal Reserve’s framework for monitoring vulnerabilities in the financial system. In my view, our financial system is substantially more resilient than it was in the mid-2000s, reflecting progress by regulators and the private sector in boosting resilience. That said, we cannot be complacent, and I see some important risks.