In pondering the issue of financial governance at the individual and household level, I am reminded of Leo Tolstoy’s infamous quote from Anna Karenina, “All happy families are alike; each unhappy family is unhappy in its own way.” There are indeed numerous causes of unhappiness, but being confronted with the consequences of bad financial decisions made in the past must surely be a common cause of much unhappiness among many families. This issue is especially pertinent in the current environment of prolonged low interest rates. Sound financial decisions are needed to ensure that households do not live beyond their means and accumulate excessive debt. This is essential to ensure the sustainable growth in consumption, rather than having debt-fuelled consumption binges followed by prolonged slumps. It is these types of considerations that have made Bank Negara Malaysia maintain a level of interest rates that we believe balances between supporting the economy and discouraging excessive risk taking. This has been supplemented with other policy tools, including macroprudential policies, to manage risks within the financial system and economy. Therefore, it is not only national governments themselves that must practice sound financial governance, they must also promote it as a key priority within the society and not create incentives that lead to unsustainable financial behaviour among economic agents. Turning now to the corporate sector, at the surface, corporate financial governance appears to have ample checks and balances. Management is accountable to boards and boards are accountable to shareholders.
For some, gentrification conjures images of fancy coffee shops and high-priced fashion boutiques. But the reality can be heartbreaking. Families who’ve lived in a home for generations are driven out, communities break up, and the social fabric of a neighborhood is irreparably damaged. We seek growth that enables everyone to fulfill their economic potential. We want enterprise that supports communities, and communities that have the tools to flourish through investment. This is good for families, good for communities, and good for the economy. Of course, you don’t need me to tell you this. You face the challenges of inequitable growth every day through your work. And that’s why I’d like to talk about the role we can play to support you create a New York City that benefits every part of the community. When I think about our work at the New York Fed, both today and going forward, it boils down to three things: We connect organizations with data and research to amplify the power of their work, we convene stakeholders to share experiences and best practices, and we are a catalyst for initiatives and approaches that help tackle some of the most complex challenges confronting our communities. Connect Some of our greatest assets are our data, analysis, and research. And I don’t say that only because I am an economist by training! Data is at its best when it leads to meaningful action.