Since 1970, the labor share of GDP in the United States has declined about 5 percentage points. Similar declines are evident in most developed and emerging market economies. Second, the distribution of labor income has become more skewed. Since 1970, the top 1 percent of households in the income distribution has more than doubled its share of the nation’s income. Third, despite the notion of the American dream, income mobility in the United States remains relatively low compared to many other countries. Also, the potential for income mobility is not evenly distributed. Research has shown that where you are born and raised in the United States still has significant implications for your future prospects. As a country, we need to address these issues. With respect to the labor share of income, maintaining the U.S. economy at full employment should help. As the unemployment rate has fallen over the past two years, the labor share of income has moved up almost 1.5 percentage points. Supporting maximum sustainable employment is part of the Fed’s dual mandate, so we can play an important role here. With respect to the rising concentration of income and the low level of income mobility, I think considerable improvements are also achievable. Income distribution can be influenced by tax policy and by educational opportunities. Income mobility can be influenced by local policies on education and housing. As Raj Chetty’s pathbreaking work makes clear, income mobility depends on where one is born and lives.
•  In Singapore, liberalisation spurred the consolidation of Singapore banks from seven banking groups to three, a process which may otherwise have taken much longer. •  Foreign bank participation in the domestic banking system must therefore be strong enough to encourage the strengthening of the local banks but not so strong as to overwhelm them. •  It is a judicious balance that each country must find for itself. Third, selective and stringent admission. Singapore has always had a very open policy towards foreign banks in wholesale and offshore banking activities. But when we selectively liberalised foreign bank access to retail banking, MAS considered three sets of factors: •  First, the banks’ prudential strength, credit ratings, and quality of risk management. We only admitted strong, well-run banks. •  Second, we took into account the relationship we had with the home regulator, as we needed to be able to work with them on consolidated supervision of these banks and trust them to regulate the head office in a sound manner. •  Third, we evaluated the banks’ long-term business plans and how they could contribute to the Singapore economy. Liberalisation is not an end in and of itself. It must ultimately lead to a stronger, safer, and more competitive financial system that serves the needs of the economy and country.