Looking to the Future
These examples—clearinghouse resilience, as well as market liquidity and its relationship to automated trading—remind us that markets evolve constantly. They change in response to regulation, but also, and perhaps more importantly, they evolve as a result of technological advances, macroeconomic conditions, and other factors.
So as regulators, we must make sure we are not just looking backwards, addressing the causes of past problems, such as the financial crisis. We must be looking forward as well. There is no greater example of this than the need to focus on the risk of cyberattack. This is probably the greatest single threat to financial stability today. It has been a priority of mine, and I hope it will continue to be so for the CFTC. And I hope that any debate over the reforms we have already made does not distract us from facing the new challenges and opportunities ahead.
Let me conclude with this. We are unlikely to predict what will cause the next financial crisis. But the measures we have implemented in response to the 2008 financial crisis have made the global financial system more resilient. The international cooperation in their implementation has been unprecedented. We are responding to the fact that the global financial system had outstripped the ability of national regulators to oversee it. All this work helps reduce the likelihood of a repetition of the terrible economic damage and suffering we experienced just a few years ago, suffering which surely contributed to the discontent witnessed at the polls.
But that discontent also reflects other forces, in particular the broader challenges facing our economies as a result of structural shifts due to decades of globalization and automation. And addressing those issues requires additional, potentially much broader, responses. Whether that involves job retraining, infrastructure funding, tax reform or other policy changes is beyond the scope of my speech. Regardless of how you voted in the American election or the Brexit referendum, those economic concerns deserve to be fully addressed. I hope our political systems and leaders can meet that challenge while maintaining reasonable regulation of the global financial marketplace.