possible to say with confidence what would have happened if these measures had not been taken, it is surely the case that whatever pressures ccps faced would have been many times greater, and the potential consequences much greater as well. moreover, as ccps grow into their enhanced role in the financial system, they will represent an ever larger locus for systemic risk. it is therefore important not to be lulled into a false sense of security that past performance is a guarantee of future ccp success. after the crisis, governments firmly resolved that even the largest financial institutions must be allowed to fail and be resolved without taxpayer support and without threatening the broader financial system or the economy. ccps therefore need to adapt to a world in which their largest clearing members will be allowed to fail and to be resolved without taxpayer support. and, as i will discuss a little later, the same is true of ccps – they, too, should have no expectation of taxpayer support if they fail. to say it as plainly as possible, the purpose of all of this new infrastructure and regulation is not to facilitate the orderly bailout of a ccp in the next crisis. quite to the contrary, ccps and their members must plan to stand on their own and continue to provide critical services to the financial system, without support from the taxpayer. see, for example, jerome h. powell ( 2013 ), “ otc market infrastructure reform : opportunities and challenges, ” speech delivered at the clearing house 2013 annual meeting, new york, november 21 ; and ben s. bernanke ( 2011 ), “ clearinghouses, financial stability, and financial reform, ” speech delivered at the 2011 financial markets conference, a meeting sponsored by the federal reserve bank of atlanta, held in stone mountain, ga., april 4. bis central bankers ’ speeches the road ahead : meeting the challenges as you can see, central clearing represents the confluence of critical market infrastructure and systemic financial institutions. as a result, the regulation and supervision of ccps present particular challenges. what matters most is the stability of the entire system, not that of one sector or another. in the united states, ccps are primarily regulated by either the commodity futures trading commission or the securities and exchange commission. under authority provided by the dodd - frank wall street reform and consumer protection act of 2010, the federal reserve also plays a role in supervising and regulating systemically important ccps and other financial market utilities. 6 in addition, the federal reserve is the holding company supervisor of a

other financial resources provided by clearing members. these skin - in - the - game requirements are intended to create incentives for the owners of ccps for careful consideration of new products for clearing, for conservative modeling of risks, and for robust default waterfalls and other resources to meet such risks as may materialize. 8 the issue is a complex one, however, and a number of factors would need to be considered in formulating such a requirement. recovery and resolution i have focused so far on what we can do to ensure that ccps do not fail : more transparency, enhanced stress testing, more robust capital and default waterfalls, stronger liquidity, and increased incentives to appropriately manage risks. i will conclude my remarks today by discussing what happens when all of these efforts encounter a severe stress event. try as we might to prevent the buildup of excessive risk, we need to be prepared for the possibility that a ccp may fail or approach failure in the future. when and if such a crisis materializes, ccps will be called on to stand on their own. ccps and regulators need to develop clear and detailed ccp recovery and resolution strategies that are well designed to minimize transmission of the ccp ’ s distress to its clearing members and beyond. see, for example, the related discussion in committee on payment and settlement systems ( 2010 ), market structure developments in the clearing industry : implications for financial stability ( pdf ) ( basel, switzerland : bank for international settlements, november ). bis central bankers ’ speeches recovery and resolution planning is a matter of intense focus among regulators and industry participants. just last month, the committee on payments and market infrastructures and the board of the international organization of securities commissions released their final report on the recovery of financial market infrastructures. 9 the report is part of an ongoing effort to provide guidance on implementing the pfmi requirements for recovery planning. on the same day, the financial stability board released a new report on the resolution of financial market infrastructures and their participants to supplement its earlier work on the report key attributes of effective resolution regimes for financial institutions. 10 these reports stress that ccps must adopt plans and tools that will help them recover from financial shocks and continue to provide their critical services without government assistance. it has been a challenge for some market participants to confront the fact that risks and losses, however well managed, do not simply disappear within a ccp but are ultimately allocated in some way to the various stakeholders in the organization – even if the risk of loss is quite