We also published a working paper called: “Studies on the Validation of Internal Rating Systems” Let me mention these principles briefly. Firstly, we set out our understanding that validation is fundamentally about assessing the predictive ability of risk estimates and the use of ratings in credit processes. Secondly, we stress that the primary responsibility for validation lies with the bank itself, while the supervisor’s responsibility is to review the bank’s processes and outcomes – a point which I think we all agree is very important. 4  BIS Review 17/2005  The remaining principles relate more to the process itself. We note that validation is a likely to be an ongoing, iterative process which will require an ongoing, iterative dialogue between banks and supervisors. Then our fourth principle reflects that there is no single validation method, or universal tool for validation, even though techniques may converge over time. We also highlight, in our fifth principle, that validation should encompass both quantitative and qualitative elements – validation is not a purely technical or mathematical exercise, but should also include an assessment of controls and other qualitative factors. Finally, we stress our view that validation processes and outcomes should be subject to review within the bank, by parties which are independent of those who are responsible for the design and implementation of the processes. I think these principles set out clearly what supervisory expectations are, and should provide a useful steer to the industry.

This body of work reflects the emergence of ISO 20022 as the global standard in payment systems, and seeks to achieve greater efficiency and interoperability in cross border payments for financial institutions and end users. Moreover, the structured and robust nature of the ISO 20022 message format provides an opportunity to enhance the information content carried in a payment message, including remittance information to support straight through processing of corporate payments, and to promote greater innovation across a common message suite. Finally, for both the long term competitiveness of our financial institutions and end users, and for the primacy of the dollar as a global settlement currency, it is imperative that the anchor element of our nation’s payment system remains well integrated in an increasingly global marketplace. With detailed planning well underway, by the end of 2017 we expect to announce ISO 20022 message format specifications and an implementation timeline. While I recognize that I am speaking principally to an audience of securities professionals, I appreciate your indulgence of these critically important and strategic payment themes, especially given the inter-connectedness and mutual dependencies that exist across payment, clearing, and settlement infrastructures. Closer to your world, and as previously mentioned, we migrated the Fedwire Securities Service 3/5  BIS central bankers' speeches  in November 2015 to a new hardware and software platform. This undertaking was, by far, the largest element of the Fedwire Modernization Program and the most significant change to the Federal Reserve’s wholesale services in a generation.