Furthermore, we are collecting data on banks’ trading and securitization risk exposures as part of an ongoing, internationally coordinated effort to improve regulatory capital standards in these areas. Moreover, analysis of liquidity risk now incorporates more explicitly the possibility of marketwide shocks to liquidity. This effort also is an example of the importance of context and the need to understand the firms’ internal risk models and risk-management systems in designing data collection requirements. Data that only capture a set of positions would not be sufficient since positions would not incorporate behavioral assumptions about firms, based on information about firms’ business models and practices. The Federal Reserve’s responsibilities for monetary policy are also relevant for systemic risk monitoring. Systemic risk involves the potential for financial crises to result in substantial adverse effects on economic activity. As the nation’s central bank, the Federal Reserve assesses and forecasts the U.S. and global economies using a wide variety of data and analytical tools, some based on specific sectors and others on large-scale models. In the wake of the crisis, research has been expanded to better understand the channels from the financial sector to the real economy. For example, building on lessons from the recent crisis, the Federal Reserve added questions to the Survey of Professional Forecasters to elicit from private-sector forecasters their subjective probabilities of forecasts of key macroeconomic variables, which provides to us, and to the public, better assessments of the likelihood of severe macroeconomic outcomes.

As in G7 Working Group on Stablecoins, October 2019, ‘Investigating the impact of global stablecoins’. https://www.bis.org/cpmi/publ/d187.pdf 7 The PRA may require subsidiarisation where firms have material retail banking operations. In making that judgement, the PRA takes account of the value and type of retail deposits and the extent to which they are covered by the FSCS. We expect branches to have under £ of retail deposits, and also take account of the number of depositors and the number of retail and small-company customers with transactional accounts. See: SS1/18, ‘International banks: the Prudential Regulation Authority’s approach to branch authorisation and supervision’.https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisorystatement/2018/ss118 6  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  banking and traditional payment systems, the regulatory response must be grounded in internationallyagreed standards. Global issues require a global response, particularly for multi-currency stablecoins intended for cross-border transactions. Along with the G7, the Financial Stability Board has been leading co-ordination of the international response to global stablecoins. The FSB consulted in April on the regulatory and supervisory challenges they present, with a final report due in October, and the Bank of England supports the efforts to set a baseline set of expectations. These include that stablecoins should be regulated based on the functions they perform and risks they create, and that there should be comprehensive domestic and international regulation and supervision. Global stablecoins should have robust governance and risk management, and be transparent about their stability mechanisms and coin-holders’ rights.