Banks too are also seeking to apply these tools and techniques to the range of their activities, many of which used to be seen as the preserve of experts: from risk assessment, to financial crime prevention and trading in the financial markets. These trends are likely to accelerate. Banking supervisors need to adapt to technology too. Supervisors need to stay abreast of how technology is changing the risks the banks are running and how they are being controlled. And just as advanced analytics are opening an ever wider range of banks’ activities to automation, so too are they creating new possibilities for us to supervise banks more efficiently and effectively. But until machines can fully replicate human cognition – a remote possibility for the foreseeable future – supervisory judgment will still have a central role to play. My central expectation is that over coming years the PRA will develop a form of ‘’cyborg supervision’ ‘ involving humans and machines working ever more closely together and leveraging their comparative strengths. 10  Bholat, D., Brookes, J., Cai, C., Grundy, K., and Lund, J (2017) 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Figures Figure 1: The quantity and cost of data  Source: Financial Stability Board (2017)  Figure 2: Textual complexity of the PRA rulebook  Source: Amadxarif et al.
It’s easy to think of the Fed as just setting interest rates, and of course that’s a major part of what we do. But we do so in order to achieve two goals set by Congress: maximum employment and price stability. In Fed-speak it’s called the dual mandate. There are serious debates taking place amongst economists and policymakers about what maximum employment actually looks like, and they probably deserve another speech of their own. But I promised not to deluge you with numbers, so I’ll focus on a few highlights. The unemployment rate last year averaged just under 4 percent, the lowest such annual figure since 1969. The latest jobs numbers also showed very strong growth, with over 2.6 million jobs added last year. The ongoing strength in the labor market has led to encouraging gains in wages. No matter how you cut it, the labor market is strong, consistent with our maximum employment goal. When we say price stability, our goal is to keep inflation around 2 percent.1 Those of you who are of my generation will remember the runaway inflation of the 1970s and early 1980s. Obviously that’s something we must avoid repeating. But the challenge of more recent years actually hasn’t been too high inflation. Instead, it’s been inflation that’s persistently too low. Over the past decade, inflation has more often than not come in below our goal. But things are looking better.