Only through much more careful study and data analysis can we thoughtfully address the two most important questions – not whether regulation should be rolled back in order to return to the liquidity conditions prior to the financial crisis, but instead: •  whether there is a diminution of liquidity and/or an increase in liquidity risk that is costly or poses risks to financial stability or macroeconomic performance; and, if this this is the case,  3  This includes requirements for total loss-absorbing capital (TLAC), Title I resolution plan requirements and the option of Title II single point of entry resolution  4  See Joint Staff Report: The U.S. Treasury Market on October 15, 2014, pp 6–7. 6  BIS central bankers’ speeches  •  whether financial market regulation could be altered in a way that improves the balance between the benefits of tougher regulation in terms of enhanced financial stability versus the costs of such regulation, including any adverse impacts on market liquidity provision. In addition, whether microstructure reforms aimed at improving the functioning of markets could be promising in that respect. We certainly don’t want to undermine the progress we have made in making the financial system more robust and resilient. But if there are adjustments to regulation that could improve liquidity provision without increasing financial stability risks, we should be open to considering such changes. I suspect, however, making this determination will require considerably more data, research and reflection before we reach any definitive conclusions.

William C Dudley: Reforming culture and behavior in the financial services industry - expanding the dialogue Opening remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the conference "Reforming Culture and Behavior in the Financial Services Industry: Expanding the Dialogue", Federal Reserve Bank of New York, New York City, 20 October 2016. * * * Welcome to the Federal Reserve Bank of New York, and to our third conference focused on culture within the financial services industry. It is encouraging to see all of you in attendance today—in particular, the many non-executive directors, representatives from the investor community, and foreign supervisors who have joined us to help broaden and deepen the dialogue. Thank you for your participation. As always, what I have to say today reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System.1 The evidence is pervasive that deep-seated cultural and ethical problems have plagued the financial services industry in recent years. Bad conduct has occurred in both investment banking and securities market activities as well as in retail banking.2 This has eroded the industry’s trustworthiness. This erosion impedes the ability of the financial services industry to do its job. That job is financial intermediation—to facilitate the efficient transfer of resources from savers to borrowers, and to help customers manage the financial risks they face. Verification—whether through regulation or internal controls—is an expensive substitute for trustworthiness.