adversary ’ s tactics ; robust surveillance to monitor for intrusion and ensure environmental integrity ; rapid response to fend off attack ; effective collaboration with allies to enhance information sharing and collective security ; and a strategic reserve to respond deftly in the event of loss. make no mistake : as it relates to the wholesale services of the federal reserve banks, we aspire not merely to a commercial standard of resiliency, or even a supervisory standard, but something approaching national security grade. we proceed on this trajectory from a position of strength, reflecting a record of experience that has endured the most severe terror attack in our nation ’ s history, a financial crisis of historic proportion, and an array of extreme weather events. but in this sphere, either intentionally we are progressing, or inevitably we are regressing : there is no idleness. thank you for your generous attention today. i ’ d be pleased to respond to a few questions. 5 / 5 bis central bankers'speeches

##nds in greater understanding of the endto - end transaction flow and identification of potential points of vulnerability. these benefits are not to be dismissed. but let us not delude ourselves : no matter how mature our framework for responding to protracted outage scenarios, no matter how sound our procedures, no matter how tested our protocol, we never want to rely on these measures from a contingency perspective. the ultimate lesson for any market infrastructure ( and for their directors, governing bodies, and supervisors ), is to so invest in resiliency and security in the core of its operation that it never finds itself in such a state. the unintended consequences of a systemic infrastructure invoking protracted outage procedures in the event of a severe disruption are unknowable, and potentially raise reasonable questions as to whether the remedy may prove more toxic than the disease. might it be preferable in select cases for a systemic infrastructure to declare a settlement holiday, unpalatable as that may be, or to work with relevant industry associations to declare that select markets are closed? are the operational challenges of conducting manually activity that is fundamentally dependent upon automation a bridge too far? do reconciliation challenges that become exponentially more complex as a disruption event extends in duration risk prospects for an orderly return home? might industry dialogue to agree on the accepted circumstances and corresponding practices for dealing with a settlement holiday in a pre - meditated manner prove to be a superior course? these questions are not easy to answer, but it is very important in the present evolution of industry discourse that they are asked. provocative question number 4 : to what extent do measures to address endpoint security risks, such as anomaly detection and assurance regimes, compel a new paradigm for the attribution of liability in the end - to - end payment transaction flow? the reality that endpoint security breaches can undermine confidence in a network even when an operator ’ s infrastructure has not been violated has spawned a novel body of work, including initiatives to enhance assurance that external endpoints are operating in adherence with an operator ’ s strict security requirements, and the development of application tools such as anomaly detection to enhance a participant ’ s management of fraud risk. as this work has progressed, it has been hard to ignore the concern that these initiatives and tools might shift the attribution of liability between participant and operator in a manner that could challenge an operator ’ s ability to take appropriate precautionary measures to protect the network. for example, if an operator becomes