set of regulations informed by macroprudential considerations. i would suggest that priority should be given to activities that pose significant risks of rapid investor flight during stress periods, with the attendant risks of firesales and other negative effects on funding and asset markets more generally. specifically, it seems sensible to prioritize two areas : short - term wholesale funding and the liquidity and redemption risks that may be present in asset management activities. these areas may, of course, overlap in some circumstances. i have on past occasions described at some length my concerns with short - term wholesale funding – especially, though not exclusively, funding associated with assets thought to be cash equivalents. 5 we are, of course, addressing these risks within prudentially regulated firms through various types of liquidity regulation and supervision, as well as changes in practice by the firms that clear tri - party repo transactions. but, as demonstrated in the years preceding the crisis, short - term wholesale funding can support a form of shadow banking outside the regulatory perimeter. indeed, one might expect that as regulatory and supervisory practice forces the internalization by regulated firms of the systemic costs of excessive dependence on see financial stability board ( 2014 ), “ adequacy of loss - absorbing capacity of global systemically important banks in resolution ( pdf ), ” ( basel, switzerland : financial stability board november 10 ). see daniel k. tarullo ( 2013 ), “ shadow banking and systemic risk regulation, ” speech delivered at the americans for financial reform and economic policy institute conference, washington, d. c., november 22. bis central bankers ’ speeches runnable short - term funding, there will be increasing incentives for more leveraged credit intermediation to migrate outside the regulatory perimeter. one policy response that the federal reserve has advocated and that has now been proposed by the financial stability board ( fsb ), is for minimum margins to be required for certain forms of securities financing transactions ( sfts ) that involve extensions of credit to parties that are not prudentially regulated financial institutions. 6 this system of margins is intended to serve the macroprudential aim of moderating the build - up of leverage in the use of these securities in less regulated parts of the financial system and to mitigate the risk of procyclical margin calls by preventing their decline to unsustainable levels during credit booms. given the ease with which such transactions may move across borders, it is particularly important that the fsb has proposed a

daniel k tarullo : advancing macroprudential policy objectives speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the office of financial research and financial stability oversight council ’ s 4th annual conference on “ evaluating macroprudential tools : complementarities and conflicts ”, arlington, virginia, 30 january 2015. * * * standing in front of this audience i feel secure in observing that we are all macroprudentialists now. the imperative of fashioning a regulatory regime that focuses on the financial system as a whole, and not just the well - being of individual firms, is now quite broadly accepted. indeed, the two entities co - sponsoring this conference were themselves created by the dodd - frank wall street reform and consumer protection act, which reoriented financial regulation toward safeguarding financial stability by containing systemic risk – an aim that may not define all of macroprudential policy, but surely rests at its center. but beneath the high - level consensus for a macroprudential orientation lies a broad range of substantive views, as well as a host of analytic and practical questions, which form the subject of this conference and many like it. experience with macroprudential policy measures in various countries is not extensive and may, in any case, have only limited applicability elsewhere because of differences in economic conditions, the relative importance of capital market and traditional bank intermediation, and many other factors. and there is sometimes a tendency to overlook the significance of institutional and legal considerations in fashioning and comparing macroprudential policies. if macroprudential policy is to be more than a catchphrase, policymakers must confront these considerations in specifying how a macroprudential perspective will inform financial regulation. today i would like to suggest some specific macroprudential objectives that i regard as both realistic and important to incorporate into a near - to medium - term policy agenda : first, continuing the task of ensuring that very large, complex financial institutions do not threaten financial stability ; second, developing policies to deal with leverage risks and susceptibility to runs in financial markets that are not fully contained within the universe of prudentially regulated firms ; and third, dealing with the vulnerabilities associated with the growing importance of central counterparties. before discussing these specifics, i will begin with some brief observations on macroprudential tools and, in particular, the special difficulties associated with time - varying macro