ben s bernanke : regulation of systemic risk opening remarks by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the conference on the regulation of systemic risk, federal reserve board, washington dc, 15 september 2011. * * * distinguished guests, i would like to welcome you to this conference on the “ regulation of systemic risk, ” which is jointly sponsored by the federal reserve board and the journal of money, credit and banking. 1 it is the fourth conference in a series that was initiated in 2005 and is held every two years. these conferences support original research on topics that are highly relevant for the federal reserve ’ s public policy mission. conference proceedings are subsequently published in special issues of the journal and disseminated to researchers at central banks and academic institutions worldwide. while the previous three conferences focused on monetary policy issues, the papers presented at this conference relate to the federal reserve ’ s duty to maintain financial stability and contain systemic risk. the dodd - frank wall street reform and consumer protection act now requires the federal reserve to take a macroprudential approach to financial regulation – that is, to consider the health of the financial system as well as the health of individual firms and markets. the recent financial crisis has spurred a great deal of research on its causes and, more broadly, on the topic of systemic risk and its regulation. this research is of critical importance. it can inform the design and implementation of macroprudential regulations and policies, and i suspect no one in this audience needs to be convinced that we must get this right. the nine papers at this conference make a variety of welcome contributions in this area. two focus on an important aspect of the recent financial crisis – namely, the rise and fall of mortgage securitization and associated swings in real estate lending. 2 other papers study the causes and indicators of systemic risk more generally and look at how well macroprudential regulations and policies can address those causes. 3 finally, several papers examine specific regulations from a macroprudential perspective, including capital requirements and risk retention rules for securitization. 4 the discussants ’ remarks, the general discussions, and the policy panel will surely be very helpful in identifying fruitful directions for further research. i welcome you to the federal reserve and wish you a stimulating and productive conference. more information about the conference, held at the board of governors of the federal reserve system, washington, september 15 – 16, 2011, is available on

continues to be highly dependent on the future evolution of the pandemic and the success of containment policies. one major reason why we can expect a rebound in activity in the second half of the year is because, when faced with the largest economic shock since the second world war, europe and its leaders showed the unique strength of the european project : by acting together, we can achieve more. the ecb has played its part in this collective effort in the face of an unprecedented crisis. the nature of the pandemic shock called for an extraordinary monetary policy response. we launched the pandemic emergency purchase programme ( pepp ) to help stabilise financial markets and ease our monetary policy stance considerably. the pepp is temporary, targeted and proportionate. it addresses the specific shock at hand, and aims to repair the economic damage and the resulting downward pressures on inflation wrought by the pandemic. in addition, it was also vital that we limited the risk of a credit crunch. so we substantially eased the conditions under which banks can obtain liquidity under our targeted longer - term refinancing operations. banks can now borrow from the ecb at interest rates which can reach - 1 %, under the condition that they are lending to the real economy. six months after we introduced our measures, our policy package has stabilised markets, protected the supply of credit and supported the recovery. this, in turn, should support the return of inflation towards our medium - term objective and safeguard price stability. at the same time, the uncertainty of the current environment requires a very careful assessment of the incoming information, including developments in the exchange rate, with regard to its implications for the medium - term inflation outlook. the governing council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. when you look at the past six months, the ecb has not been the only game in town. our measures have been complemented by forceful fiscal responses at both national and european levels. this has been a critically important factor in alleviating the impact of the pandemic on the labour market and on banks ’ lending. we judge that the economy still needs that support if the recovery is to continue and strengthen further. ambitious fiscal measures by national governments were complemented by a €540 billion european safety net. and with the next generation eu fund, europe took a decisive step forwards as the crisis