jerome h powell : current us regulatory regime and areas for reform remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at the salzburg global seminar, salzburg, austria, 26 june 2017. * * * i appreciate the opportunity to speak at the salzburg global seminar. today i will discuss our current regulatory regime, and areas where we may be able to make adjustments. as always, the views i express here are my own. 1 we need a resilient, well - capitalized, well - regulated financial system that is strong enough to withstand even severe shocks and support economic growth by lending through the economic cycle. the federal reserve has approached the post - crisis regulatory and supervisory reforms with that outcome in mind. there is little doubt that the u. s. financial system is stronger today than it was a decade ago. loss - absorbing capacity among banks is substantially higher as a result of both regulatory requirements and stress testing exercises. the banking industry, and the largest banking firms in particular, face far less liquidity risk than before the crisis. and progress in resolution planning by the largest firms has reduced the threat that their failure would pose. these efforts have made u. s. banking firms both more robust and more resolvable. evidence overwhelmingly shows that financial crises can cause severe and lasting damage to the economy ’ s productive capacity and growth potential. post - crisis reforms to financial sector regulation and supervision have been designed to significantly reduce the likelihood and severity of future financial crises. we have sought to accomplish this goal in significant part by reducing both the probability of failure of a large banking firm and the consequences of such a failure were it to occur. as i mentioned, we have substantially increased the capital, liquidity, and other prudential requirements for large banking firms. these measures are not free. higher capital requirements increase bank costs, and at least some of those costs will be passed along to bank customers and shareholders. but in the longer term, stronger prudential requirements for large banking firms will produce more sustainable credit availability and economic growth. our objective should be to set capital and other prudential requirements for large banking firms at a level that protects financial stability and maximizes long - term, through - the - cycle credit availability and economic growth. to accomplish that goal, it is essential that we protect the core elements of these reforms for our most systemic firms in capital and liquidity, stress testing and resolution. with that in mind, i will highlight five key

. conclusion all the work on resolution, both domestically and internationally, is important and necessary. but we must be realistic about what it can accomplish. in light of what has happened over the past 18 months, it is imperative that governments convince markets that they can and will put large financial firms into a resolution process rather than bail out its creditors and shareholders. yet no one can guarantee that future resolutions of systemically important firms will proceed smoothly or predictably. resolution mechanisms must be understood not as silver bullets, but as critical pieces of a broader agenda directed at the too - big - to - fail problem. measures such as strengthening capital standards and bringing all systemically important firms within the perimeter of regulation are other essential elements of that agenda.