but, now, social distancing and other restrictions imposed in response to the pandemic are causing severe, rapid declines in jobs and income. unprecedented numbers have filed for unemployment insurance in the past several weeks alone, and we know that more economic pain is still to come. the reality is that the full scale of the economic consequences is still unknown. the economic distress and the extraordinary uncertainty about the future course of the pandemic have set off a tidal wave of flows of money away from riskier investments to the safety of cash. this sudden shift led to an evaporation of liquidity and breakdowns in the functioning of key 1 / 4 bis central bankers'speeches financial markets. this includes the market for u. s. treasury securities, the cornerstone of the global financial system. these developments, if left unchecked, threaten to starve our economy of the credit that it badly needs during this difficult time. the response last month, as the risks posed by the coronavirus became increasingly apparent, the federal reserve took swift and decisive action to support the economy and stabilize financial markets. in two unscheduled meetings in the first half of march, the federal open market committee ( fomc ) quickly brought the target range for the federal funds rate to near zero. 1 the fomc also signaled that it expects to keep interest rates at this level until it is confident that the economy has weathered recent events and is on track to achieve the fed ’ s maximum employment and price stability goals. 2 these monetary policy actions serve two purposes. first, low interest rates make it easier for households and businesses to meet their borrowing needs during this time of economic stress. second, they foster broader financial conditions that will help promote the rebound in spending and investment needed to return the economy to full strength. the new york fed the new york fed has important and unique responsibilities in supporting liquid and wellfunctioning financial markets. working alongside our colleagues in the federal reserve and other agencies, we are taking rapid and significant actions to supply liquidity and to stabilize critical parts of our financial system. we are conducting large - scale repo operations to assure ample liquidity in money markets. 3 in addition, at the direction of the fomc, we are purchasing sizable quantities of u. s. treasury securities and agency residential and commercial mortgagebacked securities to improve functioning in these critical markets. 4 to put the current situation in context, we are running more open market operations, for greater sums,

by the systemic risk factors that propagated the problems in individual institutions and markets to the entire global financial system. the close relationship between individual and systemic risks provides a rationale for complementing the traditional micro - prudential perspective ( focusing on individual risks ) with a macroprudential perspective ( assessing systemic risks ). most of the financial regulatory and supervisory apparatus focalizes on the microprudential perspective. some exceptions are the cases of spain and uruguay which have been implementing mechanisms to control both the static and the dynamic dimensions of systemic risk ( e. g. dynamic provisioning and limit to currency mismatches ) during the last decade. the recent basel iii capital and liquidity accord makes advances in the consideration of systemic risk. however, most of the current financial regulation focuses on the stability of each financial institution and market considered in isolation. hence, it largely ignores the externalities that one institution poses on the others, the systemic importance of individual institutions, and the risks that are generated endogenously to the financial system. moreover, the regulation focusing on individual institutions may open possibilities for regulatory arbitrage, i. e. the possibility that financial institutions avoid regulations of certain activities by conducting them through other entities ( or lines of business ) which are subject to less severe regulations. the final objective of the macro - prudential perspective is to avoid the materialization of large social and economic costs due to financial instabilities. hence, this perspective to financial stability considers the entire financial system and intends to protect their infrastructures ( e. g. the payment system, the interbank and the money markets ). the macro - prudential bis central bankers ’ speeches perspective oversights the aggregate risk of the entire financial system by explicitly considering the exposition of individual institutions and market to common sources of risk, and the dynamic of risks that are generated endogenously. the micro - and the macro - prudential perspectives should be jointly considered in order to avoid regulatory arbitrage and to ensure financial stability. both perspectives should complement and reinforce each other in order to protect small customers and the stability of the entire financial system. hence, their contribution should be transversal to the financial safety net agencies rather than the responsibility of a specific, macroprudential authority. the following sections analyse the implications of jointly considering the micro - and the macroprudential perspectives on rules, institutions, governance and the design of macroeconomic policy. 4. micro - and macro prudential policies